Question

In a periodic inventory system, which of the following accounts may be closed by debiting Cost of Goods Sold? a) Sales, Inventory (beginning), and Gross Profit. b) Sales, Inventory (beginning), and Cost of Goods Available for Sale. c) Inventory (beginning) and Purchases. d) Purchases and Inventory (ending)."

Answer 1

Answer:

c) Inventory (beginning) and Purchases.

Explanation:

When you use perpetual inventory system, you must record cost of goods sold every time you make a sale. But when you use a periodic inventory system, you close cost of goods sold with merchandise inventory account at the end of the period.

beginning inventory + purchases - ending inventory = cost of goods sold