INVENTORIES AND COGS

Inventories and COGS

Introduction

Inventory

Inventory is the goods purchased by distributors, manufacturers, sellers etc in order to be sold. They are recorded as a current asset in balance sheet. It should be available in limit only as too much or too fewer inventories can both be a problem. If inventory is understated or overstated at the end of the year, the net income for the year is also understated or overstated respectively. If the inventory is understated or overstated at the end of the year, the balance sheet is understated and overstated respectively.

Cost of goods sold

It is the total cost ...