How Do You Compute the Purchases from Suppliers

question 95

Multiple Choice

How do you compute the purchases from suppliers:

• A)Cost of goods sold + ending inventory + beginning inventory.
• B)Cost of goods sold - ending inventory - beginning inventory.
• C)Cost of goods sold + ending inventory - beginning inventory.
• D)Cost of goods sold - ending inventory + beginning inventory.

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Definitions:

FIFO

"First-In, First-Out," an inventory valuation method assuming goods are sold in the order they are acquired, affecting the cost of goods sold and ending inventory.

Average-cost Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all similar items available during the period.

Cost of Goods Sold

The specific costs incurred during the manufacturing of a company's merchandise for sale.

Inventory

The raw materials, work-in-process products, and finished goods considered to be the portion of a business's assets that are ready or will be ready for sale.