Why is beginning and ending inventory kept as two separate figures in the cost of goods sold section?
What will be an ideal response?
Answer: When the income statement is prepared, the cost of goods sold section requires two numbers for inventory. The beginning inventory adds to the cost of goods sold, and the ending inventory is subtracted from the cost of goods sold. Since the ending and beginning inventory were calculated months apart, combining these amounts to come up with one inventory figure would not be accurate.
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