Under a Periodic Inventory System, the Buyer Does Not Use

question 102

Multiple Choice

Under a periodic inventory system, the buyer does not use which of the following accounts in recording the acquisition of merchandise inventory and related transactions?

• A) Purchases
• B) Purchase Returns and Allowances
• C) Purchase Discounts
• D) Merchandise Inventory

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Definitions:

Process Costing System

A costing methodology used in manufacturing where costs are assigned to batches of products rather than individual items, suitable for homogeneous products.

Equivalent Units

The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.

Conversion Costs

The combined costs of direct labor and manufacturing overheads, representing the costs to convert materials into finished goods.

Weighted-Average Method

A cost accounting method that averages the costs of all goods available for sale during the period, regardless of when they were acquired or produced.