Cost of goods available for sale

Cost of goods available for sale

Cost of goods available for sale is the maximum amount of goods, or inventory, that a company can possibly sell during this fiscal year. It has the formula:

Beginning Inventory (at the start of this year)+ purchases (within this year)+ Production (within this year)= cost of goods available for sale

Notice that purchases and production might not be the same throughout the year, since purchase cost and production cost might vary during the year. But at the end, the total cost of purchases and production are added to beginning inventory cost to give cost of goods available for sale.

References

1. Intermediate Accounting 8th Canadian Edition, page 433, Kieso, Weygandt, Warfield, Young, Wiecek, John Wiley & Sons Canada, Ltd, 2007, ISBN 978-0-470-83979-9


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