Question

Which of the following line items would appear on the income statement of a company that uses the periodic inventory​ system, but not on that of a company that uses the perpetual inventory​ system?

A) Net Sales Revenue
B) Cost of Goods Sold
C) Cost of Goods Available for Sale
D) Operating expenses

Answer 1

Answer:

C) Cost of Goods Available for Sale

Explanation:

Cos of goods available for sale appears in income statement made under periodic Inventory system but it does not in the income statement made under perpetual inventory system. In per periodic system COGS is calculated by adjusting purchases, allowances for purchases, freight and all other cost to cost of goods available for sale. By deducting closing inventory we calculate the COGS. On other hand in perpetual system purchases are added in the opening and purchase return and closing inventory deducted to reach at COGS.