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 items is NOT considered a product cost under both perpetual and periodic inventory systems?

Direct materials used in production

Factory supervisor's salary

Advertising expense

Depreciation on manufacturing equipment

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Verified step by step guidance

Understand the concept of product costs: Product costs are costs that are directly associated with the production of goods. These include direct materials, direct labor, and manufacturing overhead. They are capitalized as inventory and expensed as cost of goods sold when the product is sold.

Review the items listed in the problem: Direct materials used in production, factory supervisor's salary, advertising expense, and depreciation on manufacturing equipment.

Classify each item: Direct materials used in production are considered product costs because they are directly used in creating the product. Factory supervisor's salary is part of manufacturing overhead, which is also a product cost. Depreciation on manufacturing equipment is another manufacturing overhead cost, making it a product cost as well.

Identify the item that is NOT a product cost: Advertising expense is a period cost, not a product cost. Period costs are expensed in the period they are incurred and are not tied to the production process.

Conclude that advertising expense is the correct answer because it is not considered a product cost under either perpetual or periodic inventory systems.