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 the context of inventory accounting, which of the following best describes 'target total cost'?

The actual cost of goods sold calculated at the end of the accounting period under the periodic inventory system.

The sum of all costs incurred to bring inventory to its present location and condition, as recorded under the perpetual inventory system.

The cost assigned to inventory using the last-in, first-out (LIFO) method.

The predetermined cost that a company aims to achieve for producing or purchasing inventory, often used for planning and control purposes.

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Verified step by step guidance

Understand the term 'target total cost' in inventory accounting. It refers to the predetermined cost that a company aims to achieve for producing or purchasing inventory, often used for planning and control purposes.

Differentiate 'target total cost' from other inventory-related terms such as 'actual cost of goods sold,' which is calculated at the end of the accounting period under the periodic inventory system.

Recognize that 'target total cost' is not the sum of all costs incurred to bring inventory to its present location and condition, which is recorded under the perpetual inventory system.

Clarify that 'target total cost' is distinct from the cost assigned to inventory using the last-in, first-out (LIFO) method, which is a specific inventory valuation approach.

Conclude that 'target total cost' is a planning and control tool used by companies to set cost benchmarks for inventory production or purchasing, aiding in budgeting and decision-making processes.