# Cost of goods sold calculation

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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

## Comments

• Registered Posts: 981 Epic contributor 🐘
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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+F
• Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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Haggis wrote: »
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!)
• Registered Posts: 40 Regular contributor ⭐
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COGS calc

Thanks for your reply, much appreciated.
• Registered Posts: 981 Epic contributor 🐘
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Monsoon wrote: »
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 !!!
• Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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Marga wrote: »
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 said
• Registered Posts: 981 Epic contributor 🐘
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Monsoon wrote: »
I didn't check what you did, there were letters and my little brain got confused, I just went off what the OP said

i try to use letters for everything!!!! i have an algebra brain lol
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