Accounting 2024 – Question 1
Accounting 2024 – Question 1
| ₦ | |
| Stock 1/1/09 | 2200 |
| Purchases | 18000 |
| Sales | 27000 |
| Salaries | 1500 |
| Reduction in doubtful debts | 500 |
| Office expenses | 1100 |
| Other expenses | 1300 |
| stock 31/12/09 | 1000 |
The cost of goods sold is
Cost of Goods Sold (COGS) measures how much a business spent on the products it actually sold. To find this amount, we use a simple formula: Opening Stock + Purchases – Closing Stock.
From the data given: Opening Stock on 1st January 2009 is ₦2,200. Purchases during the year total ₦18,000. Closing Stock on 31st December 2009 is ₦1,000.
Calculation: ₦2,200 + ₦18,000 – ₦1,000 = ₦19,200. The opening stock and purchases together show all goods available for sale (₦20,200). Subtracting the closing stock (goods left unsold) gives us the cost of what was actually sold.
Remember: Sales revenue, salaries, and other expenses are not part of COGS. Those items appear in other parts of the financial statements.
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