- 1 Marks
Question
In preparing the profit or loss account of a sole trader, which of the following is deducted from goods available for sale to arrive at cost of sales?
i. Inventory sold
ii. Closing inventory
iii. Lost inventory
iv. Inventory withdrawn by owner
A. I and II
B. II and III
C. II and IV
D. I, II, and III
E. II, III, and IV
Answer
Answer:
E. II, III, and IV
Explanation:
To calculate cost of sales, items deducted from goods available for sale include closing inventory, lost inventory, and inventory withdrawn by owner. These items reduce the amount of goods available for sale that actually contribute to sales revenue.
- Tags: Cost of Sales, Financial Statements, Inventory
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: MAY 2021
- Uploader: Kwame Aikins