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  2. Cost of goods sold - Wikipedia

    en.wikipedia.org/wiki/Cost_of_goods_sold

    The oldest cost (i.e., the first in) is then matched against revenue and assigned to cost of goods sold. Last-In First-Out (LIFO) is the reverse of FIFO. Some systems permit determining the costs of goods at the time acquired or made, but assigning costs to goods sold under the assumption that the goods made or acquired last are sold first.

  3. Net realizable value - Wikipedia

    en.wikipedia.org/wiki/Net_realizable_value

    In this year's income statement, since the cost of the good ($25) is less than its NRV ($70), the cost of the good will get recorded as the cost of inventory. In next year's income statement after the good was sold, this company will record a revenue of $100, cost of goods sold of $25, and cost of completion and disposal of $ 20 + $ 10 = $ 30 ...

  4. Inventory valuation - Wikipedia

    en.wikipedia.org/wiki/Inventory_valuation

    The retail inventory method uses a cost to retail price ratio. The physical inventory is valued at retail, and it is multiplied by the cost ratio (or percentage) to determine the estimated cost of the ending inventory. The gross profit method uses the previous years average gross profit margin (i.e. sales minus cost of goods sold divided by ...

  5. Days in inventory - Wikipedia

    en.wikipedia.org/wiki/Days_in_inventory

    where DII is days in inventory and COGS is cost of goods sold. The average inventory is the average of inventory levels at the beginning and end of an accounting period, and COGS/day is calculated by dividing the total cost of goods sold per year by the number of days in the accounting period, generally 365 days. [3] This is equivalent to the ...

  6. FIFO and LIFO accounting - Wikipedia

    en.wikipedia.org/wiki/FIFO_and_LIFO_accounting

    In the FIFO example above, the company (Foo Co.), using LIFO accounting, would expense the cost associated with the first 75 units at $59, 125 more units at $55, and the remaining 10 units at $50. Under LIFO, the total cost of sales for November would be $11,800. The ending inventory would be calculated the following way:

  7. Inventory turnover - Wikipedia

    en.wikipedia.org/wiki/Inventory_turnover

    However, cost of sales is recorded by the firm at what the firm actually paid for the materials available for sale. Additionally, firms may reduce prices to generate sales in an effort to cycle inventory. In this article, the terms "cost of sales" and "cost of goods sold" are synonymous. An item whose inventory is sold (turns over) once a year ...

  8. Matching principle - Wikipedia

    en.wikipedia.org/wiki/Matching_principle

    Without such an accrued expense, a sale of these goods in the period they were supplied would lead to unpaid inventory (recognized as an expense but not actually incurred) offsetting the sale proceeds . This would result in a fictitious profit in the sale period and a fictitious loss in the payment period, both equal to the cost of goods sold.

  9. Inventory optimization - Wikipedia

    en.wikipedia.org/wiki/Inventory_optimization

    The typical cost of carrying inventory is at least 10.0 percent of the inventory value. So the median company spends over 1 percent of revenues carrying inventory, although for some companies the number is much higher. [4] Also, the amount of inventory held has a major impact on available cash.