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 is a basic issue of inventory management in relation to Cost of Goods Sold under perpetual and periodic inventory systems?

Calculating depreciation expense for inventory

Determining the timing and amount of inventory purchases

Allocating administrative expenses to inventory

Choosing the appropriate method for recording inventory transactions

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Verified step by step guidance

Understand the concept of inventory management: Inventory management involves tracking and controlling inventory levels, purchases, and sales to ensure efficient operations and accurate financial reporting.

Recognize the relationship between inventory management and Cost of Goods Sold (COGS): COGS is directly affected by how inventory is recorded and managed, as it represents the cost of inventory sold during a period.

Differentiate between perpetual and periodic inventory systems: The perpetual system continuously updates inventory records and COGS after each transaction, while the periodic system updates inventory and calculates COGS at the end of an accounting period.

Identify the basic issue in inventory management: The key issue is choosing the appropriate method for recording inventory transactions, as this decision impacts the accuracy of inventory records and COGS calculations under both systems.

Understand the implications of the chosen method: Selecting the right inventory recording method ensures proper tracking of inventory levels, accurate financial reporting, and compliance with accounting standards.