Cash paid to suppliers plus an increase in inventory minus an increase in accounts payable would equal cost of goods sold.

Question

Quizplus · Accepted Answer

The formula for calculating cost of goods sold is:

Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold

Therefore, cash paid to suppliers plus an increase in inventory minus an increase in accounts payable is not equal to cost of goods sold. It is actually a separate calculation that represents the total amount of cash used to acquire inventory during a specific period.

Cash Paid to Suppliers Plus an Increase in Inventory Minus