Answered: What additional accounts would you…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 5MC: Which of the following represents the components of the income statement for a manufacturing...

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Companies that sell products and goods will have inventory and cost of goods sold accounts. The basic cost of goods sold equation is:

Beginning Inventory + Purchases – Ending Inventory = Cost of Goods Sold

The ending inventory of one period is the beginning inventory of the next period. Businesses that offer services do not normally sell products as their primary business activity but may sell them to supplement their services.

What additional accounts would you expect to find in a manufacturing firm and how do they relate to the cost of goods sold?

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