ACCA Applied Knowledge · Financial Accounting · Statement of profit or loss and other comprehensive income
At 1 January, Brindle Co had inventory of $42,000. During the year it purchased goods costing $310,000 and incurred carriage inwards of $6,000 and carriage outwards of $9,000. Inventory at 31 December was $38,000. What is cost of sales for the year?
Cost of sales is $320,000: opening inventory of $42,000 plus purchases of $310,000 and carriage inwards of $6,000, less closing inventory of $38,000. Carriage outwards is a distribution expense and is excluded from cost of sales.
- A$320,000Correct
- B$311,000
- C$329,000
- D$326,000
Explanation
Cost of sales = opening inventory 42,000 + purchases 310,000 + carriage inwards 6,000 - closing inventory 38,000 = 320,000. Carriage outwards is a distribution cost, not part of cost of sales. Including it would give 329,000, which is wrong.
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