The power point presentation that the cost of goods sold is often the most challenging to...

The power point presentation that the cost of goods sold is often the most challenging to compute. What reasons may cause these challenges in determining the cost ?

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The cost of goods sold is often the most challenging to compute. Reasons that may cause challenges in determining the cost are

The perpetual method of inventory involves tracking each individual item of inventory on a minute to minute basis it can be expensive to implement.

The periodic method of inventory involves doing an inventory count at the end of each period then mathematically calculating COGS

Calculation of COGS is more complex for example if a business is dealing with changing per unit of inventory cost then assumptions have to be made as to which ones were sold the cheaper units or more expensive units.

The above reasons related to inventory is given because CoGS depends on inventory costing method adopted by the company.

Other important reasons can be overstating discounts, overstating return to suppliers, overvaluing inventory on hand, failing to write of obselete inventory.

These are the reasons why cost of goods sold is most challenging to compute.

ekkarill92 answered 11 months ago

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