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 would be categorized as Cost of Goods Sold (COGS) when operating a taco truck?

Advertising expenses for promoting the taco truck

The monthly payment for the taco truck's insurance

The cost of tortillas, meat, and vegetables used to make tacos sold to customers

Wages paid to the cashier working at the truck

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Verified step by step guidance

Step 1: Understand the concept of Cost of Goods Sold (COGS). COGS refers to the direct costs incurred in producing goods that are sold to customers. These costs typically include raw materials and direct labor directly involved in production, but exclude indirect expenses like advertising or insurance.

Step 2: Analyze each option provided in the problem. Determine whether each expense is directly tied to the production of tacos sold to customers or if it is an indirect expense.

Step 3: Evaluate 'Advertising expenses for promoting the taco truck.' Advertising is an indirect expense aimed at promoting sales, not directly tied to the production of tacos. Therefore, it is not categorized as COGS.

Step 4: Evaluate 'The monthly payment for the taco truck's insurance.' Insurance is a fixed cost and an indirect expense, not directly tied to the production of tacos. Hence, it is not categorized as COGS.

Step 5: Evaluate 'The cost of tortillas, meat, and vegetables used to make tacos sold to customers.' These are direct costs of raw materials used in producing the tacos sold to customers, making them part of COGS. Similarly, wages paid to the cashier are indirect labor costs and not part of COGS.