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

A periodic inventory system measures cost of goods sold (COGS) by:

Adjusting inventory balances after every purchase and sale transaction

Recording COGS continuously with each sale throughout the period

Calculating COGS at the end of the period as: Beginning Inventory + Purchases - Ending Inventory

Using a physical count only at the beginning of the period to determine COGS

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Verified step by step guidance

Understand the concept of a periodic inventory system: It is a method where inventory and cost of goods sold (COGS) are updated at the end of the accounting period, rather than continuously after each transaction.

Recognize the formula used to calculate COGS in a periodic inventory system: \( \text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory} \). This formula accounts for the inventory available for sale during the period and subtracts the remaining inventory at the end.

Identify the components of the formula: \( \text{Beginning Inventory} \) is the inventory at the start of the period, \( \text{Purchases} \) are the goods bought during the period, and \( \text{Ending Inventory} \) is the inventory left at the end of the period after a physical count.

Understand the role of a physical count: In a periodic inventory system, a physical count is conducted at the end of the period to determine the \( \text{Ending Inventory} \), which is crucial for calculating COGS accurately.

Apply the formula at the end of the period: Once the physical count provides the \( \text{Ending Inventory} \), substitute the values for \( \text{Beginning Inventory} \), \( \text{Purchases} \), and \( \text{Ending Inventory} \) into the formula to calculate the \( \text{COGS} \).