Explanation

Opening stock represents goods available for sale at the beginning of an accounting period. It is the inventory the business starts with on the first day of the new accounting year.

Opening stock is actually the closing stock from the previous period, carried forward. These goods were purchased in previous periods but not yet sold, so they are available to sell in the current period.

Opening stock is not the cost of goods purchased because that refers to new purchases made during the current period. It is not the cost of goods sold because COGS is calculated as: Opening Stock + Purchases – Closing Stock.

Goods returned from the last period would be returns inwards or returns outwards, which are separate items. Opening stock simply represents unsold inventory brought forward, ready to be sold or used in the new accounting period.