David wrote: Tue Jul 25, 2023 8:09 am
You will only see raw materials as expenses when the product that they are made of are sold, appearing as revenue on the income statement. Otherwise, it will not be accurate for the income statement to reflect the true operating profit. In other words, when the revenue is $0, the raw materials are treated as inventory in the balance sheet, instead of expenses.
well, it's a very nice explanation.
I mean, yeah, it's alright of freight cost = freight cost + raw materials cost as inventory which is very convenient to do it like this way,
but just wondering that is any possible to show its separately ? ? like
A. freight cost = pure freight cost
B. raw materials cost as inventory (in firm) = raw materials cost as inventory
So, we can easier to know what's exact expenditure of freight costs in any firm and won't get mistake as a CEO,
should we know what's exact expenditure of freight costs in any firm if it too high ?
and as a result, we can know it's time to swap goods to sell, or even decide to close down the firm.
Furthermore...make a wish for more detail reports
C. raw materials cost (being transit) = raw materials cost as inventory
D. total raw material cost = B+C