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 included in merchandise inventory under both the perpetual and periodic inventory systems?

Office supplies used by administrative staff

Goods sold to customers but not yet delivered

Goods held on consignment for another company

Goods owned by the company and held for sale in the ordinary course of business

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Verified step by step guidance

Understand the concept of merchandise inventory: Merchandise inventory includes goods that are owned by the company and are held for sale in the ordinary course of business. It does not include items like office supplies, goods sold but not yet delivered, or goods held on consignment for another company.

Review the perpetual inventory system: Under this system, inventory records are updated continuously as transactions occur. Merchandise inventory includes goods owned by the company and available for sale.

Review the periodic inventory system: Under this system, inventory records are updated at specific intervals, typically at the end of an accounting period. Merchandise inventory still includes goods owned by the company and available for sale.

Analyze the options provided: Office supplies used by administrative staff are not part of merchandise inventory because they are not held for sale. Goods sold to customers but not yet delivered are no longer owned by the company. Goods held on consignment for another company are not owned by the company, so they are excluded from merchandise inventory.

Conclude that the correct answer is: Goods owned by the company and held for sale in the ordinary course of business. This is the only item that qualifies as merchandise inventory under both the perpetual and periodic inventory systems.