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.

Question

Quizplus · Accepted Answer

In a periodic inventory system, the cost of goods sold is computed by subtracting the value of ending inventory from the sum of beginning inventory and purchases. This is because beginning inventory and purchases represent the total cost of goods available for sale, and by deducting the value of ending inventory, we can determine the cost of goods that were actually sold during the accounting period. Therefore, the formula used in computing the cost of goods sold is: Beginning inventory + Purchases - Ending inventory.

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