alleryPeriodic inventory system determines cost of goods sold as:
AA direct ledger calculation
BAn estimated standard cost
CA residual figure each period
DThe same as opening stock
Answer & Solution
Correct answer: C. A residual figure each period
1. Periodic system relies on actual physical count of inventory at period end.
2. Cost of goods sold = Opening + Purchases + Direct expenses − Closing.
3. Closing is counted; COGS is the residual difference.
4. Hence COGS is a residual, not directly ledgered as in perpetual.
_Source: ICAI BoS Foundation Paper 1, Ch 4 "Inventories", §4.1 ¶2_
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