Question

When using the periodic system the physical inventory count is used to determine Select one: a. both the cost of the goods sold and the cost of ending inventory. b. both the cost of the goods in ending inventory and the sales value of goods sold during the period.

Answer 1

Answer:

a. both the cost of the goods sold and the cost of ending inventory.

Explanation:

The physical count is used in the periodic inventory system to calculate the amount of ending inventory. However the cost of goods sold can be derived from using the ending inventory count. Suppose we have ending inventory of 100 units and Purchases were 500 units  Also there were no beginning inventory units so the Cost of goods Sold can be calculated as

Cost of Goods Sold= Beginning Inventory Add Purchases Less Ending Inventory

Cost of Goods Sold=  0 + 500- 100= 400