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 inventory system provides a continuous record of inventory and cost of goods sold, updating these accounts after each purchase or sale?

Periodic inventory system

Specific identification method

Just-in-time inventory system

Perpetual inventory system

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Verified step by step guidance

Understand the concept of inventory systems: Inventory systems are methods used by businesses to track and manage their inventory levels and the cost of goods sold (COGS). The two primary systems are the periodic inventory system and the perpetual inventory system.

Learn about the periodic inventory system: This system updates inventory and COGS only at the end of an accounting period. It does not provide real-time updates after each transaction.

Understand the perpetual inventory system: This system continuously updates inventory and COGS after each purchase or sale. It uses technology, such as barcode scanners and inventory management software, to maintain real-time records.

Compare the perpetual inventory system with other methods: The specific identification method tracks individual items, but it is not a system for continuous updates. Just-in-time inventory focuses on minimizing inventory levels but does not inherently provide continuous updates.

Conclude that the perpetual inventory system is the correct answer: It is the only system that provides a continuous record of inventory and COGS, updating these accounts after each transaction.