When a periodic inventory system is used:
A) Cost of goods sold is a residual amount.
B) Ending inventory is transferred to expense and the beginning inventory is transferred to assets.
C) Two entries must be made when goods are purchased.
D) A purchases account is not used; all inventory purchase entries are debits to the inventory account.

Question

Quizplus · Accepted Answer

In a periodic inventory system, cost of goods sold is calculated as a residual amount by subtracting the ending inventory from the sum of beginning inventory and purchases. It is not calculated directly as it is in a perpetual inventory system.

When a Periodic Inventory System Is Used