Accounting for IGCSE & O level - Final Statements (Section 8 - No. 41)

What is the impact of increasing the closing inventory on the cost of goods sold (COGS)?

Increases COGS.

Decreases COGS.

Has no effect on COGS.

Increases gross profit.

Because Closing Inventory is subtracted from COGS, a higher Closing Inventory leads to a lower COGS.