A merchandising firm's accounting system must allocate the Cost of Goods Available for Sale between

Question

Quizplus · Accepted Answer

The Cost of Goods Available for Sale must be allocated between Cost of Goods Sold and the ending balance in Merchandise Inventory because the cost of goods that were not sold during the period would be included in the ending balance of merchandise inventory. Choice A is incorrect because it only allocates the cost of goods available for sale to the beginning and ending balances of merchandise inventory, without accounting for cost of goods sold. Choice C is incorrect because it only allocates the cost of goods available for sale to the beginning balance of merchandise inventory and cost of goods sold, without accounting for the ending balance of merchandise inventory. Choice D is incorrect because it only allocates the cost of goods available for sale to purchases of inventory and the ending balance of merchandise inventory, without accounting for cost of goods sold.

A Merchandising Firm's Accounting System Must Allocate the Cost of Goods