Cost Of Goods Available For Sale

Cost Of Goods Available For Sale Definition And Meaning

Cost of Goods Available for Sale is that cost of Inventory or Merchandise that is ready or available for sale to customers and it is obtained after adding inventory purchases to opening inventory.

Mathematically, we can use the following cost of goods available formula or equation:

Cost of Goods Available For Sale = Opening Inventory + Inventory Purchases

For Example, if Opening Inventory is Rs. 50000, Inventory Purchases during the accounting period is Rs. 70000, then what is Cost of Goods Available for Sale?

Calculation:

We know that:

Cost of Goods Available For Sale = Beginning Inventory + Inventory Purchases

By putting the values, we get:

50000 + 70000 = Rs. 120000

It is to be noted that cost of goods available for sale does not include damaged or destroyed goods and such destroyed inventory are deducted from it in order to find out actual cost of goods available for sale.

For Example, if in the above example, Rs. 5000 goods damaged during transit, then the actual cost of goods available for sale is shown below:

= 120000 - 5000 = Rs. 115000