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 costing methods charges all manufacturing costs, including both variable and fixed manufacturing overhead, to its products?

Direct costing

Marginal costing

Absorption costing

Variable costing

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Verified step by step guidance

Understand the concept of Absorption Costing: Absorption costing is a method where all manufacturing costs, including both variable and fixed manufacturing overhead, are allocated to the cost of the product. This contrasts with methods like variable costing, which only includes variable manufacturing costs.

Review the key differences between costing methods: Direct costing and marginal costing focus on variable costs, while absorption costing includes both variable and fixed costs. Variable costing excludes fixed manufacturing overhead from product costs.

Identify the components of manufacturing costs: Manufacturing costs typically include direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead. Absorption costing ensures all these costs are charged to the product.

Understand why absorption costing is used: Absorption costing is often required for external financial reporting and tax purposes because it provides a more comprehensive view of product costs by including fixed overhead.

Relate the question to the concept: Based on the explanation, absorption costing is the correct method that charges all manufacturing costs, including both variable and fixed manufacturing overhead, to its products.