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ACC 290 Week 4 DQ1 2
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One can determine the cost of goods sold when using a periodic inventory system does not calculate the cost of goods sold until the end of the period. At the end of the period a count is done to determine the ending balance of the inventory. After this is completed the cost of goods sold is calculated by subtracting ending inventory from the goods still available for sale. The goods available for sale is the sum of the beginning inventory plus purchases. The periodic system creates different accounts for purchases, freight, returns, and discounts (p. 244). The perpetual system makes an entry to record cost of goods sold and reduces inventory every time a sale is made. The perpetual system also adjust the inventory for any transactions that affect inventory such as, freight costs, returns, and discounts (p. 244). The beginning and ending inventory affect cost of goods sold because the beginning inventory (which is from the previous month) is calculated by subtracting the current cost of goods purchased from the cost of goods available and giving the ending inventory (which is the beginning inventory for the coming month

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