Under the periodic inventory method, the beginning and ending inventories are combined and an average calculated to determine the balance sheet inventory amount.

Question

Quizplus · Accepted Answer

Under the periodic inventory method, the beginning inventory is added to the purchases made during the period, and then the ending inventory is subtracted to determine the cost of goods sold. The ending inventory amount is used on the balance sheet, not an average of beginning and ending inventories.

Under the Periodic Inventory Method, the Beginning and Ending Inventories