When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for Merchandise Inventory is:
A) The ending inventory amount.
B) The beginning inventory amount.
C) Equal to the cost of goods sold.
D) Equal to the cost of goods purchased.
E) Equal to the gross profit.

Question

Quizplus · Accepted Answer

In a periodic inventory system, the Merchandise Inventory account reflects the beginning inventory amount as it is only updated once a physical count of inventory is taken at the end of the period. The cost of goods sold and the cost of goods purchased are not reflected in the Merchandise Inventory account until the end of the period when a physical count is taken and adjustments are made. The gross profit is not reflected in the Merchandise Inventory account at all.

When Preparing an Unadjusted Trial Balance Using a Periodic Inventory