Auditors conducting tracking studies determine sales by using the following formula: Beginning Inventory - Purchases Received + Ending Inventory = Sales.

Question

Quizplus · Accepted Answer

The formula is incorrect. The correct formula to determine sales is Beginning Inventory + Purchases Received - Ending Inventory = Cost of Goods Sold. To determine sales using this formula, the cost of goods sold must be added to the gross profit margin.

Auditors Conducting Tracking Studies Determine Sales by Using the Following