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

How is the cost of goods sold (COGS) for a manufacturer computed under a periodic inventory system?

Beginning Raw Materials Inventory + Purchases - Ending Raw Materials Inventory

Beginning Work in Process Inventory + Direct Labor - Ending Work in Process Inventory

Net Sales - Gross Profit

Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory

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Verified step by step guidance

Step 1: Understand the periodic inventory system. Under this system, inventory levels are updated at the end of the accounting period, and the cost of goods sold (COGS) is calculated based on the changes in inventory and production costs during the period.

Step 2: Identify the formula for calculating COGS for a manufacturer under a periodic inventory system. The correct formula is: COGS = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory.

Step 3: Break down the components of the formula: (a) Beginning Finished Goods Inventory refers to the value of finished goods inventory at the start of the period. (b) Cost of Goods Manufactured includes all costs incurred to produce goods during the period, such as raw materials, direct labor, and manufacturing overhead. (c) Ending Finished Goods Inventory refers to the value of finished goods inventory at the end of the period.

Step 4: Gather the necessary data. To compute COGS, you need the values for Beginning Finished Goods Inventory, Cost of Goods Manufactured, and Ending Finished Goods Inventory. These values are typically found in the company's financial records or inventory reports.

Step 5: Substitute the values into the formula and perform the calculation. Use the formula: COGS = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory. Ensure all values are accurate and properly aligned with the accounting period being analyzed.