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The entries required to correctly reflect inventory and cost of sales in the financial accounts for the first year of trading are:
A)Debit inventory (SOFP) -closing inventory Credit trading a/c -closing inventor
Debit trading a/c -opening inventory Credit inventory(SOFP) -opening inventor
B)Debit inventory(SOFP)-closing inventory Credit payables -closing inventoryC)Debit inventory (SOFP)-closing inventory Credit trading a/c -closing inventory
D)Debit inventory(SOFP)-closing inventory
Credit payables-closing inventoryl consider that the correct variant is D
Yes, the answer is C. In the first year of trading you will start with no inventory and all purchases of goods for resale would be debiting cost of sales. However in your first year P&L you only include cost of sales for goods that were sold, so you would need to debit closing inventory and credit cost of sales for any inventory that is unsold at year end.
suleymanabuzerli: Why are you asking the same questions in different forums? And why are you attempting questions for which you do not have answers – you should be using a Revision Kit from one of the ACCA approved publishers. They have answers and explanations.
Do watch my free lectures on inventory because I go through all of the entries, with examples, in the lectures.
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