When using the average method under the periodic inventory system the average cost is calculated:
A)after each new purchase.
B)at the end of the period.
C)after each new sale and sales return.
D)after each new purchase and purchase return.

Question

Quizplus · Accepted Answer

Under the periodic inventory system, the average cost is calculated at the end of the period, not after each transaction. This method involves taking the total cost of goods available for sale during the period and dividing it by the total units available for sale, to determine the cost of ending inventory and the cost of goods sold.

When Using the Average Method Under the Periodic Inventory System