What is Goods Account? Video Lecture - Commerce

FAQs on What is Goods Account? Video Lecture - Commerce

1. What is a Goods Account?

Ans. A Goods Account refers to a type of account in commerce that records the transactions related to the purchase and sale of goods. It helps in tracking the inventory, cost of goods sold, and profit or loss incurred from the sale of goods.

2. How is a Goods Account different from a Service Account?

Ans. A Goods Account is used to record transactions related to the purchase and sale of physical goods, whereas a Service Account is used to record transactions related to the provision of services. While a Goods Account tracks inventory, cost of goods sold, and profit or loss on goods, a Service Account focuses on revenue earned from services provided.

3. What are the components of a Goods Account?

Ans. The components of a Goods Account include the opening inventory (goods on hand at the beginning of the accounting period), purchases (goods bought during the period), sales (goods sold during the period), and closing inventory (goods on hand at the end of the accounting period).

4. How is the cost of goods sold calculated in a Goods Account?

Ans. The cost of goods sold in a Goods Account is calculated by subtracting the value of closing inventory from the sum of opening inventory and purchases. The resulting figure represents the cost of goods that were sold during the accounting period.

5. How does a Goods Account help in determining the profitability of a business?

Ans. A Goods Account helps in determining the profitability of a business by tracking the cost of goods sold and the revenue generated from the sale of goods. By subtracting the cost of goods sold from the sales revenue, the gross profit can be calculated. This information provides insights into the financial performance of the business and helps in making informed decisions.

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Sep 10, 2025 Last updated

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