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 9 pints of ice cream are purchased for $54 and all are sold during the period, what is the cost of goods sold (COGS) under both the perpetual and periodic inventory systems?

$54 under perpetual, $0 under periodic

$6 under both systems

$0 under perpetual, $54 under periodic

$54 under both systems

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Verified step by step guidance

Understand the concept of Cost of Goods Sold (COGS): COGS represents the direct costs of producing or purchasing the goods that are sold during a specific period. It includes the purchase price of the goods and any additional costs directly related to the acquisition of the goods.

Identify the key details in the problem: 9 pints of ice cream were purchased for $54, and all of them were sold during the period. This means the entire inventory was sold, and there is no remaining inventory at the end of the period.

Understand the difference between perpetual and periodic inventory systems: In the perpetual system, inventory and COGS are updated continuously with each purchase and sale. In the periodic system, inventory and COGS are updated at the end of the accounting period based on a physical count.

Calculate COGS under the perpetual system: Since all 9 pints were sold, the COGS is equal to the purchase cost of the 9 pints, which is $54. This is because the perpetual system records the cost of each sale as it occurs.

Calculate COGS under the periodic system: At the end of the period, the total cost of goods sold is determined by subtracting the ending inventory (which is $0 since all items were sold) from the cost of goods available for sale ($54). Therefore, the COGS is also $54 under the periodic system.