Question

Sales discounts offered to customers reduce cost of goods sold. (True or False)

Answer 1

Cost of goods sold consider the total cost of the goods which are sold to the customer which is calculated by adding the beginning inventory with the Purchase and subtracting the ending inventory from it.

Cost of goods sold =

Beginning inventory + Purchase - ending inventory

Sales discount offer to the customer do not have any effect on the cost of goods sold and therefore will not have any impact on the cost of goods sold .

Therefore the statement sales discount offered to customer reduces cost of goods sold is false.