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Unformatted text preview: Review of "the Algorithm" Be certain that you understand the relationships between the numerous "algorithms" that make up the Cost of Goods Manufactured and Sold portion of the Income Statement: Of course, there is the ubiquitous "algorithm," that so many of you still argue to be "confusing". But equally important are the other, related, algorithms that can be used to identify many, otherwise unknown, numbers within that ubiquitous algorithm. For example, the Cost of Goods Available For Sale is the combination of the Beginning Inventory of Finished Goods and Cost of Goods Manufactured during the period. So too, the Cost of Goods Available For Sale must be equal to the sum of the Ending FG Inventory plus the Cost of Goods Sold . Remember the "where from" and the "where to" must be equal? Whereas the sum of the Beginning Inventory of Raw Materials plus the Raw Material Purchases for the period might be called "the Cost of Raw Materials Available " to be used, I do not know what one might call the similar number in the WIP algorithm. It might be referred to as "the Total Work in Process might call the similar number in the WIP algorithm....
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This note was uploaded on 10/20/2008 for the course ACCT 210 taught by Professor Blanchard during the Spring '08 term at University of Arizona- Tucson.
- Spring '08
- Income Statement