In a Periodic Inventory System,the Formula Used in Computing the Cost

question 43

Multiple Choice

In a periodic inventory system,the formula used in computing the cost of goods sold may be summarized as follows:

• A)Beginning inventory + purchases - ending inventory.
• B)Beginning inventory + purchases - net sales.
• C)Ending inventory + purchases - net sales.
• D)Balance in the Cost of Goods Sold account,less the balance in the Inventory Shrinkage account.

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Definitions:

Accounts Receivable

Outstanding payments due to a business from its clients for goods or services already delivered but not yet settled.

Unearned Revenues

Funds paid to a business for products or services that are to be supplied or carried out in the future.

Adjusting Entry

An accounting entry made in the books at the end of an accounting period to allocate income and expenditure to the correct period.

Accrued Revenue

Revenue that has been earned through sales or services provided but not yet received by the company.