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Hi Mr.Moffat.I Saw your inventory and ias2 example 1-3.in which u have said the double entries of closing inventory(removing)
At the end of each period, two entries are required:
(a) remove the opening inventory:
Debit Statement of Profit or Loss account
Credit Inventory account
Can i make instead of it?which is given below
DR Cost of sales
CR inventory a/c
Q2:)In your lecture you have said closing inventory goes in Staement of financial position so my question is if closing inventory is an asset why it also goes in statement of profit or loss(income statement)
your reply will be appreciated
Thank you.Q1: You could, but we don’t normally have a cost of sales account!
Q2: The purchases account records everything purchased during the period. If any of them are left in inventory then the cost of sales is lower and therefore the profit is higher.
You say you have watched the lectures on inventory. I assume that you have watched the earlier lectures as well (they are mean to be watched in order) and therefore know that for a sole trader we show the breakdown of the cost of sales (i.e. opening inventory plus purchases less closing inventory).
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