Which of the following equations is correct?
A) Consumption of merchandise = Purchases of merchandise + Increase in inventories of merchandise
B) Consumption of merchandise - Purchases of merchandise = Increase in inventories of merchandise
C) Consumption of merchandise = Purchases of merchandise - Increase in inventories of merchandise
D) Consumption of merchandise = Purchases of merchandise = Increase in inventories of merchandise

Question

Quizplus · Accepted Answer

The correct equation for calculating consumption of merchandise is the one where the increase in inventories of merchandise is subtracted from purchases of merchandise, as this accounts for any inventory that was not consumed during the period. Therefore, the correct equation is C: Consumption of merchandise = Purchases of merchandise - Increase in inventories of merchandise.

Which of the Following Equations Is Correct