The periodic inventory system is used most commonly by companies that sell
A) low-priced, high-volume merchandise.
B) low-priced, low-volume merchandise.
C) high-priced, low-volume merchandise.
D) high-priced, high-volume merchandise.

Question

Quizplus · Accepted Answer

The periodic inventory system is most appropriate for companies that sell low-priced, high-volume merchandise because such merchandise has a relatively low unit cost and is sold in large quantities. With this system, inventory levels are counted at regular intervals, such as at the end of the month or the end of the year. By subtracting the ending inventory from the beginning inventory and adding purchases to the result, the cost of goods sold can be determined. This method is more practical for companies with a high turnover of merchandise, such as those that sell low-priced, high-volume products.

The Periodic Inventory System Is Used Most Commonly by Companies