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

Question

Quizplus · Accepted Answer

In a periodic inventory system, Merchandise Inventory represents the beginning inventory amount. It is because the periodic inventory system does not track inventory levels continuously, and the ending inventory amount is determined by physically counting the inventory at the end of the accounting period. Therefore, the amount shown for Merchandise Inventory in the unadjusted trial balance is the beginning inventory amount.

When Preparing an Unadjusted Trial Balance Using a Periodic Inventory