Under the Periodic Inventory Approach the Cost of Goods Sold

question 11

Multiple Choice

Under the periodic inventory approach the cost of goods sold during a period is determined as follows:

• A) beginning inventory + net purchases - ending inventory;
• B) beginning inventory - net purchases - ending inventory;
• C) opening inventory + net purchases + closing inventory;
• D) opening inventory - net purchases + closing inventory.

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Definitions:

Average Total Cost

The total cost of production divided by the number of units produced, reflecting the cost per unit.

Competitive Price-searcher Firm

A company that sets its own prices based on its products, costs, and the competitive environment, rather than taking the market price as given.

Average Total Cost

The total cost of production divided by the quantity produced, indicating the average cost per unit.

Economic Profit

The difference between total revenue and the total opportunity costs of all resources used in production, including implicit and explicit costs.