Home For AAT student members AQ 2016 Advanced Diploma in Accounting Final Accounts Preparation

Cost of sales help

I have one issue with cost of sales, was wondering if someone could help clear things up.
In a recent test the business was VAT registered. Purchases was inclusive of VAT and inventory decreased by X amount.

eg. if purchases was £120,000 inclusive of VAT and inventory decreased by 2,000.

To get purchases net of VAT I would assume you take off the VAT from 120,000.

To get cost of sales would you use 120,000 before taking off the VAT then add 2,000 from the decrease in inventory to get the cost of sales?

or would you use 100,000 after taking of VAT then add 2,000 from decrease n inventory to get cost of sales?

Comments

  • Pian32Pian32 MAAT Posts: 390
    For Cost of Sales the Vat shouldn't be included so I would remove the VAT leaving you with £100,000 for purchases and then add the decrease in inventory which is already VAT free.
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Planned June 2021
    F8
    F9 - Planned June 2021
  • justyna24justyna24 Registered Posts: 20
    Thanks for reply
Sign In or Register to comment.