in a periodic inventory system, cost of goods sold is recorded as each same of merchandise...

in a periodic inventory system, cost of goods sold is recorded as each same of merchandise occurs true/false

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Expert Solution

In a periodic inventory system, cost of goods sold is recorded as each same of merchandise occurs - FALSE

REASON

Periodic inventory system. Under this system the amount appearing in the Inventory account is not updated when purchases of merchandise are made from suppliers. The Inventory account is commonly updated or adjusted only once—at the end of the year. During the year the Inventory account will likely show only the cost of inventory at the end of the previous year.Under the periodic system there is no Cost of Goods Sold account to be updated when a sale of merchandise occurs.

In short, under the periodic inventory system there is no way to tell from the general ledger accounts the amount of inventory or the cost of goods sold.

Perpetual inventory system. Under this system the Inventory account is continuously updated. Under the perpetual system there is a Cost of Goods Sold account that is debited at the time of each sale for the cost of the merchandise.

Hence the statement is FALSE. The statement explains perpetual inventory sytem not periodic inventory system.

ekkarill92 answered 1 year ago

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