Accounting for IGCSE & O level - Final Statements (Section 10 - No. 7)

What is the primary purpose of recording opening inventory and closing inventory in the income statement?

To determine the total purchases for the year.

To calculate gross profit.

To identify the cost of goods sold.

To track the movement of cash in the business.

Opening and closing inventory are crucial for calculating the cost of goods sold, which is then used to determine gross profit.