"Open stock plus purchases minus closing stock" is the formula of which of the following?

"Open stock plus purchases minus closing stock" is the formula of which of the following?
A . Inventory
B . Revenue
C . Cost of goods sold
D . Liability

View Answer

Answer: C

Explanation:

The amount of closing stock (properly valued) is used to arrive at the cost of goods sold in a periodic inventory system with the following calculation:

Opening stock + Purchases – Closing stock = Cost of goods sold

Reference:

– CIPS study guide page 130-131

– Closing stock definition

LO 2, AC 2.3