BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Opening Inventory of Finished Goods + Purchases-Closing Inventory of Finished Goods
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Closing Inventory of Raw Materials + Purchases-Opening Inventory of Raw Materials
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Opening Inventory of Raw Materials + Purchases-Closing Inventory of Raw Materials
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Purchases-Carriage In + Purchase Returns
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Detailed explanation-1: -Opening stock of material is added and closing stock of raw material is deducted in the material purchased and we get material consumed or used in production of a product. It is calculated as : Material Consumed = Material purchased + Opening stock of material – Closing stock of material.
Detailed explanation-2: -Closing inventory is deducted while calculating the cost of material consumed. i.e. Opening Inventory + Purchase-Closing Inventory = Cost of Material Consumed.
Detailed explanation-3: -The first step to calculating beginning inventory is to figure out the cost of goods sold (COGS). Next, add the value of the most recent ending inventory and then subtract the money spent on new inventory purchases. The formula is (COGS + ending inventory) – purchases.
Detailed explanation-4: -Solution : Cost of Materials Consumed = Opening Inventory of Materials + Purchases of Materials <br>-Closing Inventory of Materials <br> = Rs 7, 50, 000 + Rs 25, 00, 000-Rs 2, 50, 000 = Rs 30, 00, 000.