The closing inventories are not included in the cost of sale calculation but is included in the balance sheet under assets. How come it's not included in the cost of sales?
Hello lb1, 'Cost of sales' within the P&L needs to include the 'raw materials consumed' of 440. If we hadn't been given the value for 'raw materials consumed' then we would need to calculate it using the formula: 'inventories at start of year' plus 'raw materials purchased' minus 'inventories at end of year'. Therefore the 440 of 'raw materials consumed' implicitly includes the 'closing inventories' of 16. If you are comparing the April 2009 Q19 to the Day 2 tutorial Q8 then it's worth noting the slight amendments that have been made to produce the tutorial question.
