How is the total cost of goods available for sale calculated?

Prepare for ASU ACC231 Exam 2. Utilize multiple choice questions, flashcards, and detailed explanations for each question. Enhance your accounting comprehension and ace your exam!

The total cost of goods available for sale is calculated by adding the beginning inventory to the net purchases made during the accounting period. This formula reflects the total amount of inventory that a company has available to sell, incorporating both what it starts with at the beginning of the period and what has been purchased throughout that period.

Beginning inventory represents the goods that are carried over from the previous period, while net purchases account for the additional inventory acquired after considering any returns or allowances. This total is crucial because it forms the basis for determining the cost of goods sold and evaluating inventory levels.

The other options do not accurately represent the calculation of total goods available for sale. For instance, combining current assets and ending inventory does not focus specifically on the inventory aspect needed for goods available for sale. Meanwhile, considering cost of goods sold plus operating expenses relates to overall financial performance rather than inventory levels. Finally, subtracting operating expenses from net sales pertains to profitability rather than inventory measurement.

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