"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
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
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