If Inventory Is Updated Periodically,which of the Equations Is Correct

question 60

Multiple Choice

If inventory is updated periodically,which of the equations is correct?

• A)Cost of goods sold = Beginning inventory + Purchases − Ending inventory
• B)Cost of goods sold = Beginning inventory + Purchases + Ending inventory
• C)Beginning inventory + Purchases = Ending inventory
• D)Ending inventory = Beginning inventory + Purchases + Cost of goods sold

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Definitions:

Prime Cost

The combined costs of direct materials and direct labor that are directly involved in the manufacturing of a product.

Direct Labor

The wages and salaries of employees who are directly involved in the production of goods or services.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of goods, such as utilities, rent, and salaries for managers.

Direct Materials

The raw materials that can be physically and directly associated with manufacturing the end product.