A company buys 500 units of stock at a cost of £22 per unit.During the year,it sells 450 units at a price of £30 per unit.What is the "cost of goods sold" on the Income Statement?

Question

Quizplus · Accepted Answer

"Cost of goods sold" must be the cost of the goods SOLD! This is due to the "accruals" or "matching" concept. Using the wrong figure will affect profit, and therefore tax! In this example - and there are several ways to calculate the correct answer - only include what was actually SOLD. Eg: 450 units x £22 = £9,900 A includes unsold units. C & D are revenue / profit calculations.

A Company Buys 500 Units of Stock at a Cost