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Question
On the income statement, the beginning inventory is added to the cost of goods purchased to yield the _________.
On the income statement, the beginning inventory is added to the cost of goods purchased to yield the _________.
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Solution
The correct option is A cost of goods available for sale
Cost of goods sold is calculated as:
Opening stock + Purchases - Closing stock
While calculating the cost of goods available for sale, opening inventory is added to the cost of goods purchased.
Cost of goods sold is calculated as:
Opening stock + Purchases - Closing stock
While calculating the cost of goods available for sale, opening inventory is added to the cost of goods purchased.
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