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

If you are managing inventory of finished goods, which inventory system provides a continuous record of inventory balances and cost of goods sold after each sale?

Just-in-time inventory system

Specific identification method

Periodic inventory system

Perpetual inventory system

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Verified step by step guidance

Understand the concept of inventory systems: Inventory systems are methods used to track and manage inventory levels and costs. The two main types are the periodic inventory system and the perpetual inventory system.

Learn about the perpetual inventory system: This system continuously updates inventory records after each transaction, including purchases and sales. It provides real-time data on inventory balances and cost of goods sold.

Compare the perpetual inventory system with other options: The periodic inventory system updates inventory records only at specific intervals, such as at the end of an accounting period. The just-in-time inventory system focuses on minimizing inventory levels by receiving goods only as needed. The specific identification method tracks individual items but does not provide continuous updates.

Recognize the advantages of the perpetual inventory system: It allows for better inventory control, reduces the risk of stockouts or overstocking, and provides accurate and timely information for decision-making.

Conclude that the perpetual inventory system is the correct answer because it provides a continuous record of inventory balances and cost of goods sold after each sale, unlike the other systems mentioned.