Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Financial Statements of a Company

Question:

Where will Raw Materials purchased be shown in the statement of profit and loss of the company?

Options:

Purchase of stock in trade

Change in inventories

Other expenses

Cost of material consumed

Correct Answer:

Cost of material consumed

Explanation:

The correct answer is option 4- Cost of material consumed.

Raw material which is purchased in the current year is shown under cost of material consumed. Cost of material consumed is the actual cost of materials used by adjusting the opening and closing capital.
Cost of goods consumed = Opening stock + purchases - closing stock.