Cost Of Sales Equation

wannabebean

Hello All

Cost of Sales Equation

Ok. Opening Inventory + Purchases - Closing Inventory = CoS

But I seem to remember there was a much more elaborate equation than this and I can't find it (would have been Level 3 Costs and Revenues)

Something that included Sales Returns and Carriage In etc?

Does anyone know the full equation - I suspect they will trhough in a CoS with Sales or Purchase returns into the question for the Statement of Comprehensive Income

crispy

Hello,

You are correct - Carraige In should be added into Cost Of Sales, Carriage Out is an overhead (Distribution Cost).

Sales Less Sales Return = Turnover
Op. Stock + Purchases - Purchases Returns + Carraige In - Cl. Stock = Cost Of Sales

Discounts Received would be classified as Other income, Discounts Allowed are an Overhead - not a Cost of Sale.

Cost of Sales may include other directly attribtable expenses (like manufacturing costs incl. labour, depreciation) depending on the company's policy.

This is how I would see it

wannabebean

Thanks

Hello

Thank you for the response. Wouldn't surprise me if they dropped something like this in

sayyam

just had an exam and it was in the exam like this
ravenue 83890
return in 14
return ou 23
opening inventory 3643
closing inventory 6742
purchases 3849

sayyam

i have subtracted in words from sale and putwords from purchases then rest you know....now i am not sure have i don it right or wrong