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 would NOT be included as part of the cost of equipment recently purchased under generally accepted accounting principles (GAAP)?

Annual maintenance costs

Installation charges

Purchase price of the equipment

Freight-in costs

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Verified step by step guidance

Understand the concept of 'cost of equipment' under GAAP: The cost of equipment includes all expenditures necessary to acquire the asset and prepare it for use. This typically includes the purchase price, freight-in costs, installation charges, and other costs directly attributable to bringing the asset to its intended use.

Identify the items listed in the problem: Annual maintenance costs, installation charges, purchase price of the equipment, and freight-in costs.

Analyze each item: Installation charges, purchase price of the equipment, and freight-in costs are directly related to acquiring and preparing the equipment for use, so they are included in the cost of equipment under GAAP.

Consider annual maintenance costs: Maintenance costs are recurring expenses incurred after the equipment is operational. These costs are not part of the acquisition cost but are instead treated as operating expenses in the period they are incurred.

Conclude that annual maintenance costs would NOT be included as part of the cost of equipment under GAAP, as they are not directly related to acquiring or preparing the equipment for use.