I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

 

 

2

   Accounting for opening and closing inventories 

Opening inventories brought forward in the inventory account are transferred to the profit or loss 

account, and so at the end of the accounting year the balance on the inventory account ceases to be the 

opening inventory value b/f and becomes instead the closing inventory value c/f. 

2.1 Recap 

In Section 1, we saw that in order to calculate gross profit it is necessary to work out the cost of goods 

sold. In order to calculate the cost of goods sold it is necessary to have values for the opening inventory 

(ie inventory in hand at the beginning of the accounting period) and closing inventory (ie inventory in 

hand at the end of the accounting period). 

You should remember that the trading part of a statement of profit or loss includes: 

 

  $   

Opening inventory 

  X   

Plus purchases 

  X   

Less closing inventory 

 

(X) 

Cost of goods sold 

 

 X 

BPP Tutor Toolkit Copy

---

CHAPTER 7  

//

  INVENTORY