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How do you calculate a direct cost of sales in a business plan?

Cost of sales = opening stock + purchases-closing stock Cost of sales = opening stock + purchases-closing stock


What effect does a higher closing stock have on cost of sales?

A higher closing stock reduces the cost of sales, as it indicates that more inventory remains unsold at the end of the accounting period. This leads to a lower cost of goods sold (COGS) in the income statement, as COGS is calculated by adding purchases to opening stock and subtracting closing stock. Consequently, a higher closing stock can result in increased gross profit, affecting overall profitability.


What constitutes cost of sales?

cost of sales i.e. cost of goods sold include opening stock, purchases, operating expenses and then deduct the closing stock.


How do you calculate stock turnover period?

Stock turnover period = Closing stock x 365 / cost of sales


Does a higher closing stock increase cost of sales?

No, it decrease cost of sales and increases gross profit.Closing stock is not shown on a trial balance and when entered into the income statement, the closing stock will carry through to the balance sheet and increase retained income.


What is the formula for finding the amount sales?

Opening stock minus closing stock times cost per unit


What is the Journal entry for closing stock?

Closing Stock (Assets, Balance Sheet) A/C Dr. ----- Trading or P/L A/C Cr. (Expenses, Trading or P/L) A/C ----- The Dr. entry of the closing stock will remain as assets in inventory and will be carried forward to next year where as Cr. entry will be deducted [opening stock+purchase-closing stock (trading)] as like expenses in Trading or P/L A/c and not will be carried forward to the next year. ============================== Stock only needs to be one account (not both Opening and Closing accounts). Post it's balance to P&L (Cost Of Sales) as "Opening Stock". Journalise the new Stock figure as a credit "Closing Stock" to P&L (Cost Of Sales) and debit the Stock account. Calculate Cost Of Sales as above.


Opening stock plus purchases minus closing stock is called?

Its COST OF GOODS SOLD (COGS) or simply Cost of Sales (COS). This number once deducted from Sales gives you Gross Profit.


Is cost of goods sold an operating expense?

Cost of goods sold is opening stock plus purchases of inventories and other carriage costs less closing stock. Cost of sales therefore is not an operating expense...


How to calculate the closing stock of finished goods?

annual cost of sales=1800000 opening stock of finished goods=60000 finished goods storage period:10 days assuming 360 days in a year, the closing stock of finished goods is=??


What is the effect on net profit if opening stock is undervalued?

If Opening Stock is undervalued, this will result in your Cost of Sales being understated and therefore Gross and Net Profit being overstated. Of course, since Opening Stock in this period is the last period's Closing Stock, this would mean that Closing Stock in the last period was understated too, meaning that Net Profit in the last period was understated. That doesn't make it OK though!


How do you work out a gross profit percentage?

gross profit divided by sales Sales = 250000 Cost = 100000 gross profit = 150000 150000 / 250000 = 60%