- Income Statement
- Net Sales
- Cost of Goods Sold
- Operating Expenses
Cost of goods sold is part of the income statement.
If we look at our beginning inventory on January 1, 2021, for example, and we also look at our ending inventory on December 31, 2021, for example, we might find that the numbers are similar. Suppose for this example, the dollar numbers are exactly the same, even though the odds of that are very very small. If we look at all of the Purchases of products for re-sale for the year 2021, we would then know what our cost of goods sold was.
| Beginning Inventory | |
|---|---|
| + | Purchases |
| – | Purchase Returns and Allowances |
| – | Purchase Discounts |
| = | Net Purchases |
| + | Transportation In |
| = | Cost of Merchandise Purchased |
| Merchndise available for sale = Cost of Merchandise Purchased + Beginning Inventory | |
| – | Ending Inventory |
| = | Cost of Goods Sold |