CA Foundation · Accounting · Accounts from Incomplete Records
A retailer's records show: opening stock ₹1,50,000, closing stock ₹1,80,000, cash purchases ₹4,20,000, and credit purchases ₹2,30,000. What is the cost of goods sold?
Cost of goods sold is ₹5,70,000. It equals opening stock plus total purchases (both cash and credit) minus closing stock. This standard formula applies regardless of whether source records are incomplete.
- A₹5,50,000
- B₹5,70,000Correct
- C₹6,20,000
- D₹5,20,000
Explanation
COGS = Opening stock + Purchases - Closing stock = ₹1,50,000 + (₹4,20,000 + ₹2,30,000) - ₹1,80,000 = ₹1,50,000 + ₹6,50,000 - ₹1,80,000 = ₹5,70,000. Option 0 ignores opening stock, option 2 ignores closing stock adjustment, and option 3 incorrectly reduces purchases by stock change.
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