Which of the following statements concerning cost formulas in a periodic inventory system is INCORRECT?
A) The results under FIFO in a periodic system are the same as in a perpetual system.
B) The cost of goods sold would be lower using FIFO than average in a period of rising prices.
C) When using the average cost formula, a new average cost per unit is calculated after each purchase.
D) The results under average in a periodic system are not the same as in a perpetual system.

Question

Quizplus · Accepted Answer

In a periodic inventory system, the average cost per unit is calculated at the end of the period based on the total cost of goods available for sale and the total units available for sale, not after each purchase as implied in option C. This is a characteristic of the perpetual inventory system, where the average cost can be recalculated after each purchase.

Which of the Following Statements Concerning Cost Formulas in a Periodic