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 statements about companies that use process costing is FALSE?

Process costing is typically used by companies that produce large quantities of homogeneous products.

Companies using process costing can only use the periodic inventory system, not the perpetual inventory system.

Under process costing, costs are accumulated by department or process for a given period.

Process costing averages costs over all units produced during the period.

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Verified step by step guidance

Step 1: Understand the concept of process costing. Process costing is a method used by companies that produce large quantities of homogeneous products, such as chemicals, beverages, or paper. It involves accumulating costs by department or process over a specific period.

Step 2: Review the characteristics of process costing. Costs are averaged over all units produced during the period, making it suitable for industries where products are indistinguishable from one another.

Step 3: Analyze the inventory systems used in process costing. Companies using process costing can use either the periodic inventory system or the perpetual inventory system. The statement claiming that only the periodic inventory system can be used is false.

Step 4: Evaluate the other statements provided in the problem. Confirm that the other statements align with the principles of process costing, such as accumulating costs by department or process and averaging costs over units produced.

Step 5: Conclude that the false statement is: 'Companies using process costing can only use the periodic inventory system, not the perpetual inventory system,' as this is not a restriction of process costing.