Question

From the following find out the correct equation:
I. A represents opening stock
II. B represents purchases
III. C represents closing stock
IV. D represents cost of goods sold.

• A. A$-$C$=$D$-$B
• B. A$+$B$=$D$-$C
• C. D$-$A$=$B$+$C
• D. None of the above

Answer 1

The correct option is A A$-$C$=$D$-$B

Opening Stock+Purchases-Closing Stock=Cost of Goods sold.

This can be reproduced as:

Opening Stock - Closing Stock = COGS-Purchases

For example: Opening Stock Rs.45000, Purchases Rs.100000, Closing Stock Rs.35000, Cost of Goods Sold Rs.110000

Op Stock Rs.45000 - Cl Stock Rs.35000 = COGS Rs.110000 - Purchase Rs.100000