Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

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Multiple Choice

Which of the following best describes how Cost of Goods Manufactured (COGM) is calculated?

Net Sales - Cost of Goods Sold

Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory

Direct Materials Used + Direct Labor + Manufacturing Overhead

Beginning Finished Goods Inventory + Purchases - Ending Finished Goods Inventory

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Verified step by step guidance

Step 1: Understand the concept of Cost of Goods Manufactured (COGM). COGM represents the total cost incurred to manufacture products during a specific period, including direct materials, direct labor, and manufacturing overhead, adjusted for changes in work-in-process inventory.

Step 2: Identify the formula for COGM. The correct formula is: Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory.

Step 3: Break down the components of the formula. 'Beginning Work in Process Inventory' refers to the value of partially completed goods at the start of the period. 'Total Manufacturing Costs' include Direct Materials Used, Direct Labor, and Manufacturing Overhead. 'Ending Work in Process Inventory' refers to the value of partially completed goods at the end of the period.

Step 4: Compare the given options to the formula. The correct option matches the formula for COGM, which is: Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory.

Step 5: Eliminate incorrect options. For example, 'Net Sales - Cost of Goods Sold' relates to gross profit calculation, not COGM. Similarly, 'Direct Materials Used + Direct Labor + Manufacturing Overhead' represents Total Manufacturing Costs, not COGM. 'Beginning Finished Goods Inventory + Purchases - Ending Finished Goods Inventory' pertains to Cost of Goods Sold, not COGM.