Cost of goods manufactured plus the finished goods, ending equals cost of goods sold.Select one:TrueFalse

Answer

The statement "Cost of goods manufactured plus the finished goods, ending equals cost of goods sold" is False.

Explanation

To understand why this statement is false, it’s essential to clarify the relationships between the terms involved in manufacturing and accounting.

1. Cost of Goods Manufactured (COGM): This refers to the total cost incurred to produce goods during a specific period.

2. Finished Goods Inventory: This is the inventory of completed products that are ready for sale.

3. Cost of Goods Sold (COGS): This represents the direct costs attributable to the production of the goods that were sold during a specific period.

The correct relationship involves the beginning finished goods inventory, not just the ending:

$\text{Cost of Goods Sold (COGS)} = \text{Beginning Finished Goods Inventory} + \text{Cost of Goods Manufactured} - \text{Ending Finished Goods Inventory}$

Thus, it is evident that the cost of goods sold is not simply the sum of the cost of goods manufactured and the ending inventory. Therefore, the original statement is incorrect, leading to the conclusion that it is False.