A business has opening inventory of Rs. 30,000, purchases of Rs. 90,000 and closing inventory of Rs. 25,000. What is the cost of goods sold?
Correct answer: C. Rs. 95,000
- A. Rs. 85,000
- B. Rs. 90,000
- C. Rs. 95,000
- D. Rs. 115,000
Explanation
Cost of goods sold equals opening inventory plus purchases minus closing inventory. Thus, Rs. 30,000 + Rs. 90,000 - Rs. 25,000 gives Rs. 95,000.
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About Inventory Valuation
Inventory valuation determines the cost of unsold goods and its effect on cost of sales and profit. The work covers inventory counts, included costs, FIFO and weighted-average costing, and the rule that inventory is reported at the lower of cost and net realisable value, not simply at its expected selling price.
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More Inventory Valuation questions
Which item is classified as a conversion cost of inventory?
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Which cost is normally excluded from inventory cost because it does not bring inventory to its present location and condition?
Under IAS 2, inventory is generally tested for a write-down to net realisable value on which basis?
When inventory is sold, its carrying amount is generally recognized as an expense in which period?
Under FOB shipping point terms, when does the buyer generally include goods in transit in its inventory?