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

As the level of activity moves outside of the relevant range, fixed costs:

always decrease in total as activity increases

are treated as variable costs in all accounting systems

may change in total due to the need for additional capacity or resources

remain constant per unit regardless of activity level

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Verified step by step guidance

Understand the concept of fixed costs: Fixed costs are expenses that do not change in total with changes in the level of activity within a certain range, known as the relevant range.

Define the relevant range: The relevant range is the range of activity within which fixed costs remain constant in total. Outside this range, fixed costs may change due to operational adjustments.

Analyze the behavior of fixed costs outside the relevant range: When activity moves outside the relevant range, fixed costs may increase or decrease in total due to the need for additional capacity (e.g., hiring more staff, purchasing new equipment) or scaling down operations.

Clarify the distinction between fixed costs and variable costs: Fixed costs do not become variable costs outside the relevant range. Instead, they may change in total due to operational needs, but their nature as fixed costs remains unchanged.

Conclude with the correct answer: Fixed costs may change in total due to the need for additional capacity or resources when activity moves outside the relevant range.