Cost of goods sold is computed from the following equation:

A. beginning inventory - cost of goods purchased ending inventory.

B. beginning inventory cost of goods purchased - ending inventory.

C. sales - cost of goods purchased beginning inventory - ending inventory.

D. sales gross profit - ending inventory beginning inventory.

Question

Chase Melendez

Business

15 August, 23:41

Cost of goods sold is computed from the following equation:

A. beginning inventory - cost of goods purchased ending inventory.

B. beginning inventory cost of goods purchased - ending inventory.

C. sales - cost of goods purchased beginning inventory - ending inventory.

D. sales gross profit - ending inventory beginning inventory.

+5

Answers (1)

Know the Answer?

Derrick Melendez · Answer 1

B. beginning inventory cost of goods purchased - ending inventory

Explanation:

Cost of goods sold = Opening Inventory + Cost of goods purchased - Closing inventory

This is because Opening + Purchases = Total maximum level of inventory held during the year, out of which some will be sold and some will be kept as part of closing inventory.

Thus Total Opening + Purchases - Closing Inventory = Cost of goods sold

Therefore correct option is, here it is clear that beginning inventory + cost of goods purchased is written, as in option A with same factors there is negative sign in front of cost of goods purchased.

B. beginning inventory cost of goods purchased - ending inventory