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 two methods are most widely used for determining the cost of inventory in accounting systems?

LIFO method and FIFO method

Specific identification method and retail inventory method

Weighted average method and gross profit method

Perpetual inventory method and periodic inventory method

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Verified step by step guidance

Understand that the question is asking about the most widely used methods for determining the cost of inventory in accounting systems. Inventory costing methods are essential for valuing inventory and calculating the cost of goods sold (COGS).

Review the options provided: LIFO (Last-In, First-Out) and FIFO (First-In, First-Out) are inventory costing methods that determine the flow of inventory costs. Specific identification and retail inventory methods are specialized approaches. Weighted average and gross profit methods are also inventory valuation techniques. Perpetual and periodic inventory methods are systems for tracking inventory, not costing methods.

Clarify the distinction between inventory costing methods and inventory tracking systems. Inventory costing methods (e.g., FIFO, LIFO, Weighted Average) focus on how costs are assigned to inventory and COGS, while inventory tracking systems (e.g., perpetual and periodic) focus on how inventory quantities are monitored.

Identify that the correct answer should focus on inventory costing methods, as the question specifies 'determining the cost of inventory.' The perpetual and periodic inventory methods are systems for tracking inventory, not methods for determining inventory cost.

Conclude that the most widely used inventory costing methods are FIFO and LIFO, as they are commonly applied in accounting systems to determine the cost of inventory and calculate COGS. Weighted average is also widely used, but FIFO and LIFO are the most prominent.