What is the relationship between inventory and cost of goods sold by a pharmacy or medical supply business? Explain the depreciation concept. What items in a physician practice can be depreciated? What is the purpose?

Answer 1

ordering in quantity reduces price, and shipping costs. However, large inventories take up space, more rent, more fixed cost. So there is a balance to achieve.

depreciation is the credit for cost of equipement which wears out, spaced over time. The purpose is to allow businesses to have a deduction for using up equipment spaced over time.