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

When calculating the per-person cost of breakfast in a hotel, which of the following costs should management include in the Cost of Goods Sold (COGS) under a perpetual inventory system?

The cost of labor for serving breakfast

Only the cost of food remaining in inventory at the end of the period

The cost of food ingredients used to prepare breakfast during the period

The total cost of all food purchased during the period, regardless of usage

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Verified step by step guidance

Understand the concept of Cost of Goods Sold (COGS): COGS represents the direct costs attributable to the production of goods sold by a company. In the context of a hotel breakfast, it includes the cost of food ingredients used to prepare the meals served during the period.

Identify the perpetual inventory system: Under this system, inventory records are updated continuously to reflect purchases and usage. This means that only the food ingredients actually used to prepare breakfast during the period are included in COGS, not the total food purchased or remaining inventory.

Exclude irrelevant costs: The cost of labor for serving breakfast is not part of COGS. Labor costs are typically classified as operating expenses, not direct costs of goods sold.

Focus on the correct cost: The cost of food ingredients used to prepare breakfast during the period is the relevant cost for COGS. This is because these ingredients are directly consumed in the production of the breakfast served to guests.

Apply the principle: To calculate the per-person cost of breakfast, management should divide the total COGS (cost of food ingredients used during the period) by the number of breakfasts served. This ensures accurate allocation of direct costs to each guest.