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 cost-volume-profit (CVP) analysis and breakeven calculation is TRUE?

CVP analysis can only be used to calculate the breakeven point in units, not in sales dollars.

CVP analysis is not related to breakeven calculations.

CVP analysis can only be used under the periodic inventory system.

CVP analysis can be used to calculate the breakeven point in both units and sales dollars.

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Verified step by step guidance

Step 1: Understand the concept of Cost-Volume-Profit (CVP) analysis. CVP analysis is a financial tool used to determine how changes in costs, sales volume, and price affect a company's profit. It is closely related to breakeven calculations, which identify the point at which total revenue equals total costs, resulting in no profit or loss.

Step 2: Recognize that CVP analysis can calculate the breakeven point in both units and sales dollars. The breakeven point in units is calculated by dividing fixed costs by the contribution margin per unit, while the breakeven point in sales dollars is calculated by dividing fixed costs by the contribution margin ratio.

Step 3: Clarify the formulas used in CVP analysis for breakeven calculations. For breakeven in units: \( \text{Breakeven Units} = \frac{\text{Fixed Costs}}{\text{Contribution Margin per Unit}} \). For breakeven in sales dollars: \( \text{Breakeven Sales Dollars} = \frac{\text{Fixed Costs}}{\text{Contribution Margin Ratio}} \).

Step 4: Address the incorrect statements in the problem. CVP analysis is not limited to calculating breakeven in units; it can also calculate breakeven in sales dollars. Additionally, CVP analysis is directly related to breakeven calculations and is not restricted to the periodic inventory system.

Step 5: Conclude that the correct statement is: 'CVP analysis can be used to calculate the breakeven point in both units and sales dollars.' This aligns with the purpose and application of CVP analysis in financial accounting.