Which of the Following Would Appear as a Line Item

question 181

Multiple Choice

Which of the following would appear as a line item on the income statements of both a merchandiser and a manufacturer?

• A) Direct Labor
• B) Cost of Goods Manufactured
• C) Direct Materials
• D) Cost of Goods Sold

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Definitions:

Cost of Goods Sold

Cost of goods sold is the direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Periodic System

An inventory system in which the inventory level is updated and cost of goods sold is calculated at the end of an accounting period.

Perpetual Inventory

An inventory management system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Periodic System

An accounting method used for tracking inventory where updates to the inventory account are made periodically, typically at the end of an accounting period.