Cost of goods sold calculation
Haggis
Registered Posts: 40 Regular contributor ⭐
I feel as if this is basic accounts and feel a bit silly asking this question but as it is ages since I have completed final accounts I just want to check my calculation is correct as below for calculating the COGS figure -
Sales Figure £50k
Stock at start of year £10k
+ purchases £5k
= £15k
less stock at end of year £10k
= £5k
£50k less £5k = £45k Gross Profit
My reason for checking this is it would seem that my clients previous accountant did not include any stock figures in the previous year.
many thanks
Sales Figure £50k
Stock at start of year £10k
+ purchases £5k
= £15k
less stock at end of year £10k
= £5k
£50k less £5k = £45k Gross Profit
My reason for checking this is it would seem that my clients previous accountant did not include any stock figures in the previous year.
many thanks
0
Comments
-
Hi
Sales 50= A
Opening stock 10= B
Purchases 5=C
15= D=B+C
Closing stock (10)=E
5=F= D-E
Gross Profit 55=G=A+F0 -
I feel as if this is basic accounts and feel a bit silly asking this question but as it is ages since I have completed final accounts I just want to check my calculation is correct as below for calculating the COGS figure -
Sales Figure £50k
Stock at start of year £10k
+ purchases £5k
= £15k
less stock at end of year £10k
= £5k
£50k less £5k = £45k Gross Profit
My reason for checking this is it would seem that my clients previous accountant did not include any stock figures in the previous year.
many thanks
Yes, this is correct.
Possibly the previous accountant didn't include stock as opening and closing were both the same. However what you have done is correct, and strictly speaking opening and closing stock should always be included. To not do so is lazy (but I admit that in the case of very very small accounts I have been lazy, but only when there has been no effect!)0 -
COGS calc
Thanks for your reply, much appreciated.0 -
Yes, this is correct.
Possibly the previous accountant didn't include stock as opening and closing were both the same. However what you have done is correct, and strictly speaking opening and closing stock should always be included. To not do so is lazy (but I admit that in the case of very very small accounts I have been lazy, but only when there has been no effect!)
oh my so sorry i got it completely wrong i added the last bit and needs taken off soooooooooorry i had it correct on the two columns but then this things puts everything in one !!!0 -
oh my so sorry i got it completely wrong i added the last bit and needs taken off soooooooooorry i had it correct on the two columns but then this things puts everything in one !!!
I didn't check what you did, there were letters and my little brain got confused, I just went off what the OP said0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 317 NEW! Qualifications 2022
- 155 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 92 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 274 Tax
- 136 Bookkeeping
- 7.2K General accounting discussion
- 201 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership