Problem in understanding dominos income statment



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i couldnt understand as why decrease and increase in inventory and dimuntion in value of investment coming in income statment of dominos.

1 Answer(s)


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When inventory is used to make a product that expense is recorded under the COGS.

However, there are instances when inventory level changes other than when used to make the company's products. Inventory could have been damaged, stolen, gone bad, expired etc. When such a thing happens you will have to reduce your inventory item on the balance sheet by a proportional amount. When you reduce inventory on the balance sheet you need to reduce a corresponding expense account on the income statement. This account is typically called the "decrease and increase in inventory"