Use the information below to answer the following question(s).Frazer Inc.had the following activities in the year:

-Which of the following formulae would determine costs of goods sold in a merchandising entity?
A)Purchases - Ending inventory
B)Beginning inventory + Purchases - Ending inventory
C)Beginning inventory - Purchases + Ending inventory
D)Beginning inventory - Ending inventory - Purchases
E)Ending Inventory - Beginning inventory - Purchases

Question

Use the information below to answer the following question(s).Frazer Inc.had the following activities in the year:
 
-Which of the following formulae would determine costs of goods sold in a merchandising entity?
A)Purchases - Ending inventory 
B)Beginning inventory + Purchases - Ending inventory 
C)Beginning inventory - Purchases + Ending inventory 
D)Beginning inventory - Ending inventory - Purchases 
E)Ending Inventory - Beginning inventory - Purchases

Quizplus · Accepted Answer

To determine the cost of goods sold in a merchandising entity, we need to add the beginning inventory to purchases and then subtract ending inventory. This formula ensures that the cost of all goods purchased during the period are accounted for, and any unsold goods are deducted from the total to determine the cost of goods sold. Therefore, the correct formula is beginning inventory + purchases - ending inventory. Option B is the only formula that follows this logic.

Use the Information Below to Answer the Following Question(s)