MGT120H5 Chapter Notes - Chapter 6: Gross Margin, Gross Profit, European Cooperation In Science And Technology
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MGT120H5 Full Course Notes
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Document Summary
Chapter #6 inventory and cost of goods sold. Cost of goods sold are usually a merchandise company"s expenses. Inventory is an asset on the balance sheet. Cost of goods sold is an expense on the income statement. Cost of inventory on hand = inventory. Cost of inventory that has been sold = cost of goods sold. Sales revenue is based on the sale price of the inventory sold (i. e. chair sold for ) Cost of goods sold is based on the cost of the inventory sold (i. e. per chair sold) Inventory on the balance sheet is based on the cost of the inventory still on hand (i. e. per chair still on hand) Gross profit (gross margin) excess of sales revenue over cost of goods sold. Inventory = number of units on hand x cost per unit of inventory. Cost of goods sold = number of units of inventory sold x cost per unit of inventory.
