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

The cost of finished goods inventory includes all but which of the following?

Factory overhead costs

Selling and administrative expenses

Direct labor costs

Direct materials used in production

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Verified step by step guidance

Understand the concept of finished goods inventory: Finished goods inventory refers to the completed products that are ready for sale. The cost of finished goods inventory includes all costs incurred during production.

Identify the components of production costs: Production costs typically include direct materials, direct labor, and factory overhead costs. These are the costs directly associated with manufacturing the product.

Clarify the role of selling and administrative expenses: Selling and administrative expenses are not part of production costs. These are considered period costs and are expensed in the period they are incurred, rather than being included in the cost of inventory.

Compare the options provided in the question: Review each option to determine whether it is a production cost or a period cost. Direct materials, direct labor, and factory overhead are production costs, while selling and administrative expenses are period costs.

Conclude which cost is excluded from finished goods inventory: Based on the analysis, selling and administrative expenses are excluded from the cost of finished goods inventory because they are not directly related to the manufacturing process.