ACC 210 Lecture Notes - Lecture 6: Gross Profit, Current Asset, Net Income

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Chapter six - inventory & cost of goods sold. Current asset - an asset that will turn into cash within 12 months, or an operating cycle if that is longer than 12 months. Inventory will always show up as a current asset. Includes items a company intends for sale to customers. Also includes items that aren"t yet finished products (for manufacturers) such as raw materials and work-in-process. Cost of goods sold - an expense account representing the cost of the inventory that is sold during the period. Ending inventory and cost of goods sold sale. Beginning inventory (asset) + purchases during the year (asset) = total inventory available for. Total inventory available for sale = ending inventory (asset in the balance sheet) + cost of goods sold (expense in the income statement) Ending inventory - the inventory not sold, balance sheet asset. Cost of goods sold - the inventory sold, income statement expense.

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