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 statements is true regarding the schedule of cost of goods manufactured under a perpetual inventory system compared to a periodic inventory system?

The periodic system updates the cost of goods manufactured continuously throughout the period.

Only the perpetual system requires a schedule of cost of goods manufactured.

The perpetual system excludes manufacturing overhead from the cost of goods manufactured schedule.

Both systems calculate the cost of goods manufactured in the same way, using direct materials, direct labor, and manufacturing overhead.

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Verified step by step guidance

Understand the concept of the schedule of cost of goods manufactured: It is a detailed report that calculates the total manufacturing costs incurred during a period, including direct materials, direct labor, and manufacturing overhead.

Recognize the difference between perpetual and periodic inventory systems: The perpetual system continuously updates inventory records, while the periodic system updates inventory records at the end of the accounting period.

Clarify that the schedule of cost of goods manufactured is not exclusive to either system: Both systems use the same components (direct materials, direct labor, and manufacturing overhead) to calculate the cost of goods manufactured.

Note that manufacturing overhead is always included in the cost of goods manufactured schedule, regardless of the inventory system used.

Conclude that the correct statement is: Both systems calculate the cost of goods manufactured in the same way, using direct materials, direct labor, and manufacturing overhead.