Q: Which of the following best describes the formula for calculating Cost of Goods Sold (COGS)?

$$\text{COGS} = \text{Opening Stock} + \text{Purchases} - \text{Closing Stock}$$

Q: Which formula can be used to calculate opening stock using sales and COGS data?

$$\text{Opening Stock} = \text{Sales} - \text{Gross Profit} - \text{COGS} + \text{Closing Stock}$$

Question 1

Which of the following best describes the formula for calculating Cost of Goods Sold (COGS)?

Accepted Answer

$$	ext{COGS} = 	ext{Opening Stock} + 	ext{Purchases} - 	ext{Closing Stock}$$

Question 2

A business has sales of $$500,000 and a cost of goods sold of 320$$,000. What is the gross profit?

Accepted Answer

$$\180$$,000$

Question 3

Which of the following is NOT included in the calculation of opening stock?

Accepted Answer

Sales revenue from the previous period

Question 4

A trader reports sales of $$750,000, opening stock of 100$$,000, purchases of $$400,000, and closing stock of 150$$,000. What is the cost of goods sold?

Accepted Answer

$$\350$$,000$

Question 5

Using the previous question's data, what is the gross profit?

Accepted Answer

$$\400$$,000$

Question 6

If a business made sales of $900,000 and the cost of goods sold was 60% of sales, what is the gross profit?

Accepted Answer

$$\360$$,000$

Question 7

Which of the following is an example of a variable expense?

Accepted Answer

Transaction fees

Question 8

In the income statement, which item is deducted from sales to arrive at gross profit?

Accepted Answer

Cost of Goods Sold

Question 9

Which of the following best describes a capital expenditure?

Accepted Answer

Purchase of machinery that will be used for several years

Question 10

A company’s annual net sales revenue is $$1,000,000 and its cost of goods sold is 600$$,000. What is the gross profit?

Accepted Answer

$$\400$$,000$

Question 11

Which of the following is a non-operating expense?

Accepted Answer

Interest payments

Question 12

If a business has opening stock of $$50,000, purchases of 200$$,000, and closing stock of $70,000, what is the cost of goods sold?

Accepted Answer

$$\180$$,000$

Question 13

Which of the following statements about expenses is TRUE?

Accepted Answer

Expenses are recognized when incurred, not necessarily when paid

Question 14

A business purchased 100 units at $$50 each and sold all units for 7$$,000. What is the gross profit?

Accepted Answer

$$\2$$,000$

Question 15

Which of the following is NOT a component of operating expenses?

Accepted Answer

Interest payments

Question 16

In the context of financial accounting, what does 'closing stock' represent?

Accepted Answer

Unsold goods remaining at the end of the period

Question 17

Which formula can be used to calculate opening stock using sales and COGS data?

Accepted Answer

$$	ext{Opening Stock} = 	ext{Sales} - 	ext{Gross Profit} - 	ext{COGS} + 	ext{Closing Stock}$$

Question 18

Which of the following is a fixed expense?

Accepted Answer

Rent

Question 19

A business has sales of $$300,000, COGS of 100$$,000, and total expenses of $135,000. What is the net income?

Accepted Answer

$$\65$$,000$

Question 20

Which of the following best describes the relationship between gross profit and operating expenses?

Accepted Answer

Gross profit is used to cover operating expenses and provide for operating profit

Gross and Net Profit Computation in Financial Accounting

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