Doubt

Meda Jeevansai

Screenshot one is correct because you are finding the sales value at cost

Thread Starter

why sale is not included

Thread Starter

why sale is not included

Balamurugan V

No it should not be included. For example If a merchant had opening stock worth RS.20,000 And the net purchases worth RS. 1,00,000 And the closing stock left with him is worth RS 30,000 It clearly shows that he sold goods worth RS 90,000 So that the forumula is Cost of goods sold =opening stock+Net purchases-closing stock Net purchases =purchases - purchase returns

Thread Starter

Unsold cost should not be included I am right

Thread Starter

Am I right??

Balamurugan V

Sale(either at cost or selling price) should not be included Because The purpose of the formula is to find out the cost of goods sold.(i.e., sales at cost price) Closing stock is the cost of goods unsold and it is to be reduced from the summation of opening stock and net purchases to arrive at the cost of goods sold.

Balamurugan V

Screen shot is correct

Balamurugan V

No it should not be included. For example If a merchant had opening stock worth RS.20,000 And the net purchases worth RS. 1,00,000 And the closing stock left with him is worth RS 30,000 It clearly shows that he sold goods worth RS 90,000 So that the forumula is Cost of goods sold =opening stock+Net purchases-closing stock Net purchases =purchases - purchase returns

Thread Starter

Direct expenses will also comes under cogs ??

CA Suraj Lakhotia Admin

Yes

Thread Starter

Sir but why they have not given in icai material

CA Suraj Lakhotia Admin

Which chapter did you refer?

Thread Starter

Chapter 7 icai material sir