- 1 Marks
Question
If the opening and closing inventories of an entity are ₦34,565 and ₦41,222 respectively, and the cost of sales is ₦160,545, how much are the purchases?
A. ₦119,323
B. ₦153,888
C. ₦167,202
D. ₦201,767
E. ₦236,332
Answer
Answer:
C. ₦167,202
Explanation:
Purchases can be calculated using the accounting equation for cost of sales:
Cost of Sales = Opening Inventory + Purchases – Closing Inventory.
By rearranging the equation, Purchases = Cost of Sales + Closing Inventory – Opening Inventory, so Purchases = ₦160,545 + ₦41,222 – ₦34,565 = ₦167,202.
- Tags: Accounting Equation, Cost of Sales, Inventory, Purchases
- Level: Level 1
- Topic: Double-Entry Accounting Principles
- Series: MAY 2022
- Uploader: Kwame Aikins