SIDC Module 7 Financial statements and the reporting framework question: RM600,000 and closing inventory RM120,000

SIDC Module 7Financial statements and the reporting framework

A retailer's sales were RM900,000. Opening inventory was RM100,000, purchases RM600,000 and closing inventory RM120,000. What was its gross profit?

A RM200,000
B RM280,000
C RM300,000
D RM320,000

Show the answer and explanation

Answer: D. RM320,000

Cost of sales = opening inventory + purchases − closing inventory = 100,000 + 600,000 − 120,000 = RM580,000. Gross profit = 900,000 − 580,000 = RM320,000. RM300,000 ignores the inventory movement (sales − purchases). RM280,000 adds closing inventory instead of deducting it. RM200,000 treats closing inventory as part of the cost of sales and leaves out opening inventory. Source: SIDC Module 7 Study Outline (Jul-Dec 2026) Topic 2 Elements of Financial Statements, 2.3; MFRS 102 Inventories (as at October 2026).

Common mistake

Adding closing inventory to cost of sales instead of deducting it.

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