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 formulas correctly computes Cost of Goods Manufactured (COGM)?

Beginning Finished Goods Inventory + Purchases - Ending Finished Goods Inventory

Net Sales - Cost of Goods Sold

Beginning Raw Materials Inventory + Purchases - Ending Raw Materials Inventory

Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory

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Verified step by step guidance

Understand the concept of Cost of Goods Manufactured (COGM): COGM represents the total cost incurred to manufacture products during a specific period, including raw materials, labor, and overhead, adjusted for changes in Work in Process (WIP) inventory.

Identify the components of the formula: The formula for COGM is 'Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory'. Each term represents a key element in calculating the cost of goods manufactured.

Break down the formula: (1) Beginning Work in Process Inventory refers to the value of partially completed goods at the start of the period. (2) Total Manufacturing Costs include direct materials, direct labor, and manufacturing overhead incurred during the period. (3) Ending Work in Process Inventory represents the value of partially completed goods at the end of the period.

Apply the formula step-by-step: (1) Add the Beginning Work in Process Inventory to the Total Manufacturing Costs to account for all costs incurred during the period. (2) Subtract the Ending Work in Process Inventory to exclude costs related to unfinished goods at the end of the period.

Verify the formula's accuracy: Ensure that the formula aligns with the definition of COGM and correctly adjusts for changes in Work in Process Inventory to reflect the total cost of goods completed during the period.