The correct answer is D. Cost of goods sold – Closing stock – Purchases = Opening stock.
The cost of goods sold is the cost of the goods that a company has sold during a period. It is calculated by taking the beginning inventory, adding the cost of goods purchased, and subtracting the ending inventory. The opening stock is the inventory that a company has at the beginning of a period. The purchases are the goods that a company has bought during a period. The closing stock is the inventory that a company has at the end of a period.
The equation D. Cost of goods sold – Closing stock – Purchases = Opening stock is not correct because it does not take into account the beginning inventory. The beginning inventory is the inventory that a company has at the beginning of a period. It is calculated by taking the ending inventory of the previous period and adding the purchases of the current period.
The following equation is correct:
Cost of goods sold = Opening stock + Purchases – Closing stock
This equation takes into account the beginning inventory, the purchases, and the closing stock.