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 items is NOT included in the calculation of Cost of Goods Manufactured under both the perpetual and periodic inventory systems?

Direct materials used

Factory overhead

Cost of goods sold

Direct labor

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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. It includes direct materials used, direct labor, and factory overhead, but does not include costs related to selling or administrative expenses.

Review the components of COGM: The calculation includes direct materials used (raw materials consumed in production), direct labor (wages paid to workers directly involved in production), and factory overhead (indirect costs such as utilities, depreciation, and maintenance related to the production process).

Identify the item that is NOT part of COGM: Cost of Goods Sold (COGS) is excluded from the calculation of COGM. COGS represents the cost of inventory sold during a period and is calculated separately after determining the finished goods inventory and sales data.

Clarify the distinction between COGM and COGS: COGM focuses on the production costs incurred to manufacture goods, while COGS pertains to the cost of goods that have been sold. These are distinct concepts in financial accounting.

Conclude that Cost of Goods Sold is not included in the calculation of COGM under either the perpetual or periodic inventory systems, as it is a separate calculation related to sales rather than production.