When a periodic inventory system is used


When the periodic inventory system is used: opera

Answer

Answer: When the periodic Inventory system is used the cost of goods sold can be calculated by subtracting ending inventory amount from the sum of beginning inventory and net purchases. Uner the periodic Inventory system, the purchases are recorded in the purchase account and the inventory account in the accounting records shows the cost of inventory that was recorded when the last physical inventory count took place. So when the next inventory account is finished, the balance in purchase account is transferred to Inventory account and at last which is adjusted in order to match the ending balance in the Inventory account. So firstly Goods available for sale are calculated as follows: Beginning Inventory + Purchases = Cost of goods available for sale. Then cost of goods sold is calculated as follows : Cost of goods sold = Cost of goods available for sale – Ending Inventory.

Answer: (C)

Leave a Comment