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

In a manufacturing company using a perpetual inventory system, how are the units completed and transferred out during a period calculated?

By adding the units in beginning inventory to the units in ending inventory

By counting only the units in ending inventory at the end of the period

By adding the units started during the period to the units in beginning inventory, then subtracting the units in ending inventory

By subtracting the units started during the period from the units in ending inventory

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Verified step by step guidance

Understand the concept: In a manufacturing company using a perpetual inventory system, the calculation of units completed and transferred out during a period involves tracking the flow of inventory. This includes beginning inventory, units started during the period, and ending inventory.

Step 1: Identify the units in beginning inventory. These are the units that were already in process at the start of the period.

Step 2: Add the units started during the period. These are the new units that were introduced into production during the current period.

Step 3: Subtract the units in ending inventory. These are the units that remain in process at the end of the period and have not yet been completed or transferred out.

Step 4: The formula for calculating units completed and transferred out is: \( \text{Units Completed and Transferred Out} = \text{Units in Beginning Inventory} + \text{Units Started During the Period} - \text{Units in Ending Inventory} \).