When Calculating Cost of Goods Sold on the Income Statement

question 45

True/False

When calculating Cost of Goods Sold on the Income Statement, the beginning inventory and not the ending inventory value is required.

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Definitions:

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life to reflect its decrease in value over time.

GAAP

Stands for Generally Accepted Accounting Principles, which are a common set of accounting standards and procedures that companies must follow when they compile their financial statements.

Accounting Estimate

Approximations or judgments made by management when preparing financial statements, due to uncertainty in determining the exact amounts.

Multiple Periods

Refers to accounting or financial analysis over several time frames, such as quarters or years, to evaluate performance or investments.