When Preparing an Unadjusted Trial Balance Using a Periodic Inventory

question 181

Multiple Choice

When preparing an unadjusted trial balance using a periodic inventory system,the amount shown for merchandise inventory is:

• A)The ending inventory amount.
• B)The beginning inventory amount.
• C)Equal to the cost of goods sold.
• D)Equal to the cost of goods purchased.
• E)Equal to the gross profit.

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Definitions:

Inventory Cost Flow

The process by which costs associated with inventory are accounted for, impacting how cost of goods sold and ending inventory are calculated.

Gross Profit

The difference between total revenue and the cost of goods sold, indicating the fundamental profitability of a company's core activities.

Rising Prices

A situation in which the general level of prices for goods and services in an economy increases over a period of time.

Market Cost

The current price at which goods, assets, or services can be bought or sold in the marketplace.