Relationship between Inventory and COGS: Beginning Inventory + Purchases = Goods Available for Sale. Goods...
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Accounting
Relationship between Inventory and COGS:
Beginning Inventory + Purchases = Goods Available for Sale.
Goods Available for Sale = COGS + Ending Inventory
1. Which method yields higher net income? (Hint: Higher Ending Inventory means lower COGS. Lower COGS (COGS is an expense account) = Higher Net Income)
2. Which method would a business choose under the income statement approach?
3. Which method would a business choose under the Balance Sheet approach?
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