Increase in Ending inventory value Cause Declining of Cost of good sold. 1- True 2- False and Why ?

True

COGS= Beging Inventory +Purchase - Ending Inventory

Increase in ending inventory is declined the cost of good sold not true and false, The reason Goss margin of loss.

Tru. Because the inventory change is often presented as an adjustment to purchases in the calculation of the cost of goods sold. For example, if purchases were $300,000 during the current period and the inventory amounts are increased by $15000, the cost of goods sold is $285,000

False, because when if we have ending inventory of value 100 when its sold or part of it, the cost of sold will booked with the same value that you are going to invoice/ sale

 

Increase in Ending inventory value Cause Declining of Cost of goods sold

Answer is : True

 

But this is true only for the Finished Goods inventory and not for Raw Material

 

The reason for this is because when you sale the Finished Goods inventory Debit goes to Cost of sales and Credit goes to Inventory.

 

So if Cost of goods sold is not debited will result in Decline in Cost of goods sold and consequently there will not be any Credit to inventory meaning increase in FG inventory.

False. Cause Declining of cost of good sold make the inventory value is same or lesser because of decline of cost of good.

In other terms inventory value may increase because of huge demand of the goods sold already in the market thereby selling price may go up and proprotionately increase the inventory value.

My analysis and Thinking. Thanks.