In Financial Statements,the Number of Units Shown in Cost of Goods

question 65

Multiple Choice

In financial statements,the number of units shown in cost of goods sold as compared to the number of the units actually produced:

• A) is always higher.
• B) is always lower.
• C) is always the same.
• D) can be either higher or lower.

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Definitions:

Perpetual Inventory System

An inventory system that updates the quantity and cost of inventory immediately following purchase or sale activities.

Merchandise Inventory

Goods and products that a retailer, wholesaler, or distributor holds in stock with the intent to sell them for profit.

Cost of Goods Sold

The total direct costs attributable to the production of goods sold by a company during a specific period.

Sales Returns & Allowances

Transactions where sellers accept returned goods from buyers, or provide a price reduction or discount, reducing the initial sales revenue.