Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsTowards the end of the year, Adam managed to purchase 100 more bagson credit from his supplier for an order in the new year. This leaves him withRM3,120 of inventory on hand at the end of the year.Calculation for Adam’s Cost of Goods SoldOpening inventoryNilPlus inventory purchased during the year RM34,320(1,100 bags @ RM 31.20 each)Equals inventory available for saleRM34,320Less inventory on hand at the end of RM 3,120the year(100 bags @ RM 31.20 each)Cost of goods soldRM31,200For a service business, the income statement will usually not have a calculationof cost of goods sold. In some instances, where labour costs can be directlyattributed to sales, you may consider including these costs as the cost of goods(services) sold.TIPRegularly (monthly) produce profi t and loss information and compareagainst activities in the previous months to ensure that your profi texpectations are being met15chapter 1 01-21 Eng.indd 158/15/11 5:01:24 PM