In a periodic inventory system, beginning inventory plus net purchases is known as which of the following?

• A. Ending inventory
• B. Cost of goods available for sale
• C. Gross profit
• D. Cost of goods sold

Answer: (B)

Verified step by step guidance

1. Understand the components involved in inventory accounting under a periodic inventory system: Beginning Inventory, Net Purchases, Ending Inventory, Cost of Goods Sold, and Cost of Goods Available for Sale.
2. Recall that Beginning Inventory is the value of inventory at the start of the accounting period, and Net Purchases represent the total purchases made during the period minus any purchase returns or allowances.
3. Recognize that when you add Beginning Inventory to Net Purchases, you get the total inventory that was available for sale during the period. This is expressed as: \[\text{Cost of Goods Available for Sale} = \text{Beginning Inventory} + \text{Net Purchases}\]
4. Differentiate this from Ending Inventory, which is the inventory remaining at the end of the period, and Cost of Goods Sold, which is calculated as: \[\text{Cost of Goods Sold} = \text{Cost of Goods Available for Sale} - \text{Ending Inventory}\]
5. Conclude that the term for Beginning Inventory plus Net Purchases is 'Cost of Goods Available for Sale', which represents the total inventory that could have been sold during the period.