The Flow of Inventory Costs BALANCE SHEET Purchase cost (or manufacturing Current assets costs) as Inventory incurred as goods INCOME STATEMENT are sold Revenue Cost of goods sold Gross profit Expenses Net income Irwin/McGraw-Hill rme icoruw-Hill Companies, Inc., 1999?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Flow of Inventory Costs BALANCE SHEET Current assets: Inventory INCOME STATEMENT Revenue Cost of goods sold Gross profit Expenses Net income Purchase cost (or manufacturing costs) as incurred as goods are sold