Understanding Ending Inventory Calculation

What is ending inventory?

• The total sales made during a reporting period.

• The amount of inventory remaining on the premises at the end of a reporting period.

• The total purchases made during a reporting period.

• The amount of inventory sold during a reporting period.

Why is ending inventory important for a business?

• It helps in determining the total sales.

• It is needed to derive the cost of goods sold and calculate profits.

• It is used to calculate the total purchases.

• It helps in determining the total expenses.

Which of the following is the formula to calculate ending inventory?

• Beginning inventory + Purchases + Cost of goods sold

• Beginning inventory - Purchases + Cost of goods sold

• Beginning inventory + Purchases - Cost of goods sold

• Beginning inventory - Purchases - Cost of goods sold

• $50,000

• $100,000

• $150,000

• $200,000

In the formula for ending inventory, what does "Purchases" refer to?

• The total amount of inventory sold during the period.

• The total amount of inventory bought during the period.

• The total amount of inventory at the beginning of the period.

• The total amount of inventory at the end of the period.

What is the impact of an inaccurate ending inventory figure on a business?

• It can lead to incorrect sales figures.

• It can result in incorrect profit calculations.

• It can cause errors in employee payroll.

• It can affect the company's marketing strategy.

• $50,000

• $30,000

• $70,000

• $100,000

Which of the following components is NOT part of the ending inventory calculation?

• Beginning inventory

• Purchases

• Cost of goods sold

• Total sales