Which of the following formulas represents cost of goods sold for a merchandising business?
A) Beginning inventory - ending inventory = cost of goods sold
B) Purchases and freight in - ending inventory = cost of goods sold
C) Ending inventory + purchases and freight in - beginning inventory = cost of goods sold
D) Beginning inventory + purchases and freight in - ending inventory = cost of goods sold

Question

Quizplus · Accepted Answer

Cost of goods sold for a merchandising business is calculated by adding the beginning inventory to the net cost of purchases (which includes freight in) and subtracting the ending inventory. Therefore, the formula for cost of goods sold is Beginning inventory + Purchases and freight in - Ending inventory, which is represented by option D.

Which of the Following Formulas Represents Cost of Goods Sold