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 is considered distribution inventory in the context of Cost of Goods Sold under perpetual and periodic inventory systems?

Goods held at a warehouse awaiting shipment to customers

Finished goods still in the production facility

Work-in-process inventory on the factory floor

Raw materials stored for production

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Verified step by step guidance

Understand the concept of distribution inventory: Distribution inventory refers to goods that are ready for sale and are held at a location awaiting shipment to customers. It is distinct from raw materials, work-in-process, and finished goods still in production.

Review the perpetual and periodic inventory systems: Both systems track inventory, but the perpetual system updates inventory records continuously, while the periodic system updates them at specific intervals. Distribution inventory is relevant in both systems as it represents goods ready for sale.

Analyze the options provided: Goods held at a warehouse awaiting shipment to customers fit the definition of distribution inventory, as they are ready for sale and not part of production processes.

Eliminate incorrect options: Finished goods still in the production facility, work-in-process inventory, and raw materials stored for production are part of the production process and do not qualify as distribution inventory.

Conclude that the correct answer is 'Goods held at a warehouse awaiting shipment to customers,' as this aligns with the definition of distribution inventory in the context of Cost of Goods Sold.