Select the statements below that correctly describe the flow of costs in a merchandiser's accounting cycle. Check all that apply:a) Beginning inventory + net purchase = merchandise available for saleb) Merchandise that is sold becomes an expense reported on the income statementc) Merchandise that is purchase becomes an asset reported on the balance sheetd) Ending inventory + cost of goods sold = total merchandise available for sale

Question

Business

Alexus Poole

21 September, 16:03

Select the statements below that correctly describe the flow of costs in a merchandiser's accounting cycle. Check all that apply:a) Beginning inventory + net purchase = merchandise available for saleb) Merchandise that is sold becomes an expense reported on the income statementc) Merchandise that is purchase becomes an asset reported on the balance sheetd) Ending inventory + cost of goods sold = total merchandise available for sale

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Answers (2)

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Nikolas Frazier · Answer 1

Beginning inventory + net purchase = merchandise available for sale

Explanation:

Beginning inventory + net purchase = merchandise available for sale is the statement that correctly describes the flow of costs in a merchandiser's accounting cycle, in the given options.

The fact remains true that 'Goods Available For Sale' is not just an accounting concept but as the name implies, it is the beginning inventory and any purchased inventory within the period that will constitute the amount of goods available for sale.

If we had 10 units left from last period and we purchase 90 units this period, we will only have 100 units available for sale.

Paul Rhodes · Answer 2

a) Beginning inventory + net purchase = merchandise available for sale

Explanation:

Accounting cycle is a procedure within the accounting sciences whose main objective is to allow the merchant to identify, classify, measure and elaborate the important information for the sales flow of his business. This cycle allows information about the business to be always up to date for the merchant to evaluate his sales and earnings.

This cycle has five phases that are called capture, recognition, accumulation process, summarization and disclosure.

Within the options in the question above, we can state that the letter A shows parts of a trader's accounting cycle. This is because "Beginning inventory" can be associated with the recognition stage, while "net purchase" refers to the accumulation process stage, ending with "merchandise available for sale" that can be associated with the summary and disclosure stage.