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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

How does the Cost of goods sold section of the income statement differ between merchandising and manufacturing companies?

To determine

Cost of goods sold:

Cost of goods sold is the accumulated total of all the costs incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

To discuss: The difference between the cost of goods sold section of the income statement between merchandising, and manufacturing companies.

Explanation

  • In the merchandising business, the finished goods are purchased for the purpose of resale. In this case, the cost of the products sold is known as the cost of the merchandise sold...

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