Multiple Choice
Under the periodic inventory system, how is the cost of goods sold (COGS) determined at the end of the accounting period?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Another term for the minimum required rate of return is the cost of:
A
goods sold
B
sales
C
capital
D
inventory
Verified step by step guidance1
Understand the concept of 'minimum required rate of return': This refers to the minimum return that an investor expects to earn from an investment to make it worthwhile. It is often used in financial decision-making to evaluate whether a project or investment is viable.
Recognize that the term 'cost of capital' is closely related to the minimum required rate of return. The cost of capital represents the return required by investors or creditors to provide funds to a business. It serves as a benchmark for evaluating investment opportunities.
Differentiate between the provided options: 'cost of goods sold,' 'sales,' and 'inventory' are unrelated to the concept of the minimum required rate of return. These terms are associated with operational aspects of a business rather than financial evaluation metrics.
Link the correct term to the concept: The 'cost of capital' is the appropriate term because it reflects the minimum return required to compensate investors for the risk of investing their capital in a business or project.
Conclude that the correct answer is 'cost of capital,' as it aligns with the definition and purpose of the minimum required rate of return in financial accounting and decision-making.
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