BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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COGS (or cost of sales when referring to services) is workedout by the formula:
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= Opening stock + Purchases-Closing stock
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= Sales revenue-Cost of goods sold
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= Gross profit-Expenses
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Explanation:
Detailed explanation-1: -So, the extended COG formula is: COGS = Beginning inventory + purchases + Freight In – Ending inventory – Purchase Discounts – Purchase Returns and Allowances. Beginning inventory: this is the inventory amount at the opening of the stock period.
Detailed explanation-2: -Cost of goods sold (COGS) is calculated by using the COGS formula, which is represented as: (Beginning Inventory + Purchases) – Ending Inventory = COGS.
Detailed explanation-3: -Closing Stock Formula (Ending) = Opening Stock + Purchases – Cost of Goods Sold.
Detailed explanation-4: -Cost of goods sold = opening stock + net purchases + expenses on purchases-sales.
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