Cost Of Sales And Inventories

Question 1

What are inventories under IAS2

Answer 1

Current assets held for sale in the ordinary course of business

Question 2

What is the calculation for cost of sales

Answer 2

Opening sales
+purchases
+carriage inwards
- closing inventories
= cost of sales

Question 3

What is carriage inwards/outwards and where are they posted

Answer 3

CI is cost to receive goods from suppliers and is posted in COS

CO is cost to distribute good and is treated as an expense below GP

Question 4

What do service companies COS include.

Answer 4

Direct labour cost
Sales commission
Martial used

Question 5

What is the double entry for purchasing inventory

Answer 5

Dr purchase exp
Cr TP/cash

Question 6

How do we account for year end closing inv using double entry

Answer 6

Dr inv account (£closing inventory)
Cr cos expense (£closing inventory

Question 7

How do we reverse out opening inventories using double entry

Answer 7

Dr cos expense (£opening inv)
Fr inv account (£opening inv)