Question

Cost of goods sold = opening stock + net purchases + expenses on purchases - sales.
Which part of the formula is wrong?

• A. Opening stock
• B. Net purchases
• C. Expenses on purchases
• D. Sales

Answer 1

Answer: (D)

Sales

Cost of goods sold is the direct cost attributable to the goods which is sold by the organization.

Cost of goods sold may be calculated as under:

Opening stock

Add: Purchases (net of returns)

Add: Direct expenses

Less: Closing stock