The formula to calculate Cost of Goods Sold (COGS) is: MCQ with Answer and Explanation

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The formula to calculate Cost of Goods Sold (COGS) is:

A. Sales - Net Profit

B. Opening Stock - Purchases - Closing Stock

C. Opening Stock + Purchases + Direct Expenses - Closing Stock

D. Purchases + Closing Stock - Opening Stock

Answer: Option C

Solution (By JKSSB Mock Tests)

COGS accounts for all direct costs of making/buying the goods actually sold during the period.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

In Social Accounting, treating pollution emitted by a factory as a negative entry is an example of pricing an:

A. External Cost (Negative Externality)

B. Sunk Cost

C. Opportunity Cost

D. Internal Cost

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Correct Answer: Option A

Explanation:
Pollution is an external cost because the burden is borne by society, not directly reflected in the company's internal financial books.

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Question #2

The accounting equation for a business on a particular date: Assets ₹5,00,000; Liabilities ₹2,00,000. Capital will be:

A. ₹3,00,000

B. ₹2,00,000

C. ₹5,00,000

D. ₹7,00,000

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Correct Answer: Option A

Explanation:
Capital = Assets - Liabilities = ₹5,00,000 - ₹2,00,000 = ₹3,00,000.

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Question #3

Which of the following is an example of a real account?

A. Machinery Account

B. Salary Account

C. Creditor Account

D. Sales Account

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Correct Answer: Option A

Explanation:
Machinery Account represents a tangible asset, which is a real account. The rule is 'Debit what comes in, credit what goes out'.

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