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income statement - excessive detail income statements...

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INCOME STATEMENT Under a periodic inventory system, the income statements of a merchandiser and a manufacturer  differ in the cost of goods sold section. Merchandisers compute cost of goods sold by adding the  beginning merchandise inventory to the  cost of goods purchased  and subtracting the ending  merchandise inventory. Manufacturers compute cost of goods sold by adding the beginning finished  goods inventory to the  cost of goods manufactured  and subtracting the ending finished goods  inventory. Illustration  14-5  shows these different methods.  Illustration 14-5    Cost of goods sold  components Helpful Hint We assume a periodic inventory system in this illustration.
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A number of accounts are involved in determining the cost of goods manufactured. To eliminate 
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Unformatted text preview: excessive detail, income statements typically show only the total cost of goods manufactured. A separate statement, called a Cost of Goods Manufactured Schedule, presents the details. (For more information, see the discussion below and Illustration 14-8 .) Illustration 14-6 shows the different presentations of the cost of goods sold sections for merchandising and manufacturing companies. The other sections of an income statement are similar for merchandisers and manufacturers. Cost of goods sold sections of merchandising and manufacturing income statements...
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