Formulas Flashcards by Matthew Morley

Q

How is cost of sales calculated?

A

(Opening inventory + purchases) - closing inventory

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Q

How it inventory costed?

A

Production cost. (Labour + material costs) x quantity
Net realisable value. Selling price - selling costs. Think auction houses.

The lower of these two will be chosen according to the prudence convention.

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Q

How is straight line depreciation calculated?

A

(Cost of an asset - residual value)/useful life of an asset

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Q

How is straight line depreciation calculated?

A

(Cost of an asset - residual value)/useful life of an asset

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Q

How is the reducing balance method of deprecation calculated?

A

Depreciation rate(%) x carrying amount.

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Q

How is weighted average costs calculated?

A

Cost of goods sold/units available for resale

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