The correct statement is Opening Stock + Net Purchases + Direct Expenses - Closing Stock = Cost of Goods Sold. Cost of goods sold (COGS) is the cost of merchandise that is sold to the customers. It includes the cost of raw materials purchased, direct expenses incurred, the value of opening stock, i. e. , the value of the last years unsold stock and excludes closing stock if any, i. e. , the value of the current years unsold stock. The formula to calculate COGS is:Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses ? Closing Stock.