To what can we attribute the difference between projected total cost of goods so

Question

To what can we attribute the difference between projected total cost of goods sold and projected cash payments for Inventory In the first quarter of operations? Quantum Graphics sells all its Inventory In the month of purchase and purchases its inventory on account. Customers do not pay for the goods It purchases until 30 days after the date of purchase Due to the Matching Concept, cash sales require payments for inventory In the month they occur There Is no difference between the cost of goods sold and cash payments

Explanation / Answer

Cost of goods sold = Opening Stock + Purchases - Closing Stock

In the first quater there would be no opening stock hence difference cannot be due to opening stock. Purchases whether made in cash or credit are taken while calculating COGS. Hence if payment for purchases is made in the second quater i.e. purchases are made on credit they will not affect cash but will be counted in COGS. Hence option 2 is correct.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.