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 costs are capitalized as inventory during the completion of products under both perpetual and periodic inventory systems?

Product costs

Selling expenses

Administrative expenses

Period costs

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Verified step by step guidance

Understand the concept of capitalized costs: Capitalized costs are those that are included in the value of inventory and are expensed when the inventory is sold. These costs are directly related to the production or acquisition of inventory.

Identify product costs: Product costs include direct materials, direct labor, and manufacturing overhead. These costs are directly tied to the production of goods and are capitalized as inventory under both perpetual and periodic inventory systems.

Differentiate product costs from period costs: Period costs, such as selling expenses and administrative expenses, are not directly related to the production of inventory. These costs are expensed in the period they are incurred and are not capitalized as inventory.

Understand the treatment under inventory systems: Both perpetual and periodic inventory systems capitalize product costs as inventory. The difference lies in how inventory is tracked, but the classification of costs remains the same.

Conclude that only product costs are capitalized as inventory: Selling expenses, administrative expenses, and other period costs are excluded from inventory capitalization under both inventory systems.