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 inventory systems assigns cost to Cost of Goods Sold (COGS) at the time of each sale, rather than at the end of the accounting period?

Perpetual inventory system

Specific identification method

Periodic inventory system

Weighted average method

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Verified step by step guidance

Understand the key difference between inventory systems: The perpetual inventory system updates inventory records and assigns costs to Cost of Goods Sold (COGS) at the time of each sale, while the periodic inventory system updates inventory records and calculates COGS at the end of the accounting period.

Review the specific identification method: This method tracks individual items in inventory and assigns their specific cost to COGS at the time of sale. It is often used for unique or high-value items.

Examine the weighted average method: This method calculates an average cost for all inventory items and assigns this average cost to COGS, typically used in periodic inventory systems but can also be applied in perpetual systems.

Focus on the perpetual inventory system: This system continuously updates inventory records and assigns costs to COGS immediately after each sale, making it distinct from the periodic system.

Conclude that the perpetual inventory system and specific identification method both assign costs to COGS at the time of sale, but the periodic inventory system and weighted average method typically calculate COGS at the end of the accounting period.