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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

In the context of calculating Cost of Goods Sold (COGS) under both perpetual and periodic inventory systems, to whom are inventory costs most often allocated?

Administrative staff

Goods remaining in ending inventory

Goods sold to customers

Company shareholders

Previous problemNext problem

Verified step by step guidance

Understand the concept of Cost of Goods Sold (COGS): COGS represents the direct costs attributable to the production of goods sold by a company. It includes the cost of materials and labor directly used to create the goods.

Recognize the distinction between perpetual and periodic inventory systems: In a perpetual system, inventory records are updated continuously as transactions occur. In a periodic system, inventory records are updated at the end of an accounting period.

Identify the allocation of inventory costs: Inventory costs are allocated to either goods sold to customers (COGS) or goods remaining in ending inventory. This allocation is crucial for accurate financial reporting.

Understand why inventory costs are allocated to goods sold to customers: The costs associated with goods sold are recognized as an expense (COGS) on the income statement, reflecting the cost of generating revenue.

Clarify that inventory costs are not allocated to administrative staff or company shareholders: Administrative costs are classified as operating expenses, and shareholders are not directly involved in inventory cost allocation.