cost of goods 2

Cost of Goods (i.e. merchandise) Sold

can be categorized as follows:

•

Opening inventory, at retail

is defined as the value of merchandise at the start of a period, value recorded

at the current selling price.

•

Opening inventory, at cost

is defined as the value of the merchandise at the start of a period, value

recorded at cost price.

•

New net purchases

is defined as the billed cost of merchandise purchased. It is calculated by deducting

returns and allowances to vendors from gross purchases.

•

Inward transportation (i.e. freight)

is defined as the expense incurred for transporting the goods to the

facility.

•

Total cost of goods

is defined as the sum of cost of merchandise purchased and inward transportation.

•

Total merchandise handled at cost

is defined as the total value obtained after adding opening inventory

and total cost of the purchases.

•

Closing inventory, at cost

is defined as the amount derived from inventory left at the end of an operating

period when calculated at cost.

•

Gross cost of merchandise sold

is defined as the total merchandise handled with cost of the closing

inventory deducted.

•

Cash discount

is defined as a reduction in the price of an item for sale allowed if payment is made within a

stipulated period. (Thefreedictionary.com)

•

Net cost of the goods sold

is defined as the value obtained after cash discounts are deducted from cost of

merchandise sold.