For a trading company using a physical inventory system, gross margin equals sales less cost of sales,
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Question:
For a trading company using a physical inventory system, gross margin equals sales less cost of sales, where cost of sales equals opening inventory plus purchases minus closing inventory.
Your task: Explain when the change in dollar value of opening and closing inventory will result in: (i) assessable income for taxation purposes (ii) an allowable deduction for taxation purposes. Your answer should include reference to the relevant taxation legislation.
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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