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Why Does Inventory Get Reported on Some Income Statements? |
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Answer» It is an asset and its ending balance should be reported as a current asset on a company's balance sheet. Inventory is not an INCOME statement account. However, the change in Inventory is a component in the calculation of the Cost of Goods Sold. (Cost of Goods Sold is considered to be an EXPENSE and is subtracted from SALES on a merchandising company's income statement.) Some income statements will show the calculation of Cost of Goods Sold as Beginning Inventory + Net Purchases = Goods Available - Ending Inventory. In that situation the beginning and ending inventory does appear on the income statement. |
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