Multiple Choice
A cost that contains both variable and fixed cost elements is called a(n):
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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
Under the periodic inventory system, beginning inventory plus net purchases minus ending inventory equals which of the following?
A
Net purchases
B
Cost of goods available for sale
C
Cost of goods sold
D
Gross profit
Verified step by step guidance1
Step 1: Understand the components involved in the periodic inventory system. The key elements are Beginning Inventory, Net Purchases, Ending Inventory, and Cost of Goods Sold (COGS).
Step 2: Recall the formula for Cost of Goods Available for Sale, which is: \[\text{Cost of Goods Available for Sale} = \text{Beginning Inventory} + \text{Net Purchases}\]
Step 3: Recognize that Cost of Goods Sold (COGS) is calculated by subtracting Ending Inventory from Cost of Goods Available for Sale: \[\text{COGS} = \text{Cost of Goods Available for Sale} - \text{Ending Inventory}\]
Step 4: Substitute the expression for Cost of Goods Available for Sale into the COGS formula: \[\text{COGS} = (\text{Beginning Inventory} + \text{Net Purchases}) - \text{Ending Inventory}\]
Step 5: Conclude that the expression Beginning Inventory plus Net Purchases minus Ending Inventory equals Cost of Goods Sold, which represents the cost of inventory sold during the period.
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