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

If 3 bananas cost $0.99, what is the cost of goods sold (COGS) for 12 bananas under both perpetual and periodic inventory systems, assuming all 12 bananas are sold at the same rate?

$3.30 under both systems

$3.96 under perpetual, $3.30 under periodic

$0.99 under perpetual, $3.96 under periodic

$3.96 under both systems

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Verified step by step guidance

Step 1: 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 this case, it refers to the cost of the bananas sold.

Step 2: Calculate the cost per banana. Since 3 bananas cost $0.99, divide $0.99 by 3 to find the cost of one banana. Use the formula:

\frac{0.99}{3}

Step 3: Determine the total cost for 12 bananas. Multiply the cost per banana by 12 using the formula:

12 \times \frac{0.99}{3}

Step 4: Understand the difference between perpetual and periodic inventory systems. In both systems, the COGS calculation for this problem remains the same because all 12 bananas are sold at the same rate, and there are no inventory fluctuations or additional purchases.

Step 5: Conclude that the COGS for 12 bananas under both perpetual and periodic inventory systems is the same, as the cost per unit and the quantity sold are consistent.