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

Under the perpetual inventory system, the unit product cost is the same as the:

selling price of each unit

average cost of all units available for sale during the period

cost assigned to each unit sold at the time of sale

cost determined only at the end of the accounting period

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Verified step by step guidance

Understand the perpetual inventory system: This system continuously updates inventory records to reflect purchases and sales. It tracks the cost of goods sold (COGS) and inventory levels in real-time.

Recognize the concept of unit product cost: In the perpetual inventory system, the unit product cost refers to the cost assigned to each unit sold at the time of sale. This cost is determined based on the inventory valuation method used (e.g., FIFO, LIFO, or weighted average).

Clarify why the unit product cost is not the selling price: The selling price is the amount charged to customers, which includes profit margin and other factors. It is distinct from the cost assigned to the unit sold.

Explain why the unit product cost is not the average cost of all units available for sale during the period: The perpetual inventory system assigns costs to units sold at the time of sale, not based on an average cost calculated for the entire period.

Highlight the real-time nature of the perpetual inventory system: Unlike periodic systems, the perpetual system does not wait until the end of the accounting period to determine costs. It assigns costs to units sold immediately, ensuring accurate and timely financial reporting.