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 statements about perpetual and periodic inventory systems is correct?

Under the periodic inventory system, inventory records are updated after every purchase and sale.

The perpetual inventory system only determines COGS at the end of the accounting period.

Under the perpetual inventory system, the Cost of Goods Sold (COGS) is updated continuously with each sale.

The periodic inventory system provides real-time information about inventory balances.

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Verified step by step guidance

Understand the key differences between perpetual and periodic inventory systems. The perpetual inventory system updates inventory and Cost of Goods Sold (COGS) continuously with each transaction, while the periodic inventory system updates inventory records and calculates COGS only at the end of the accounting period.

Analyze the first statement: 'Under the periodic inventory system, inventory records are updated after every purchase and sale.' This is incorrect because the periodic system does not update inventory records continuously; it updates them periodically, typically at the end of the accounting period.

Evaluate the second statement: 'The perpetual inventory system only determines COGS at the end of the accounting period.' This is incorrect because the perpetual system updates COGS continuously with each sale, providing real-time information.

Review the third statement: 'Under the perpetual inventory system, the Cost of Goods Sold (COGS) is updated continuously with each sale.' This is correct because the perpetual system tracks inventory and COGS in real-time.

Assess the fourth statement: 'The periodic inventory system provides real-time information about inventory balances.' This is incorrect because the periodic system does not provide real-time updates; inventory balances are determined at the end of the accounting period.