ACCTG 230 Chapter Notes - Chapter 06: Earnings Before Interest And Taxes, Finished Good
Document Summary
Chapter 06 inventory and cost of goods sold. Part a : understanding inventory and cost of goods sold. Inventory is made up of items held for sale, intended for sale and not yet nished items in normal business. The flow of inventory costs is : manufacturing companies make inventory (raw material > work in progress > Finished goods: merchandising companies buy inventory nished for resale (assemble, sort, repackage, store and install) Total inventory for sale is found by taking beginning inventory less purchases during the year. Multiple step income statements consist of gross pro t, operating income, income before. Gross pro t is found by taking net sales revenue less the cost of goods sold. Operating income is found by taking the cost of good sold adding utility expense and adding general expense. Income before taxes is found by taking non operating revenue plus expenses. Net income is found by taking income before taxes and adding taxes.