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Does a cash basis retail store have to deduct inventory from…

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does a cash basis retail...
does a cash basis retail store have to deduct inventory from purchases to compute cost of sales?
Submitted: 2 years ago.Category: Tax
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3/8/2016
Tax Professional: emc011075, Tax adviser replied 2 years ago
emc011075
emc011075, Tax adviser
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Hi. My name is ***** ***** I will be happy to help you.

If you carry inventory you will have to figure out cost of goods sold or COGS. Because your current inventory are not sold yet, you will have to deduct them from the purchases (total inventory). Cost of inventory is not deductible until your inventory are sold. If you purchase 50 pairs of shoes for a resale but only sell 30 pairs, you can only deduct cost of those 30 pairs.

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