Which of the following statements is correct regarding either the perpetual or periodic inventory systems?
A)In a perpetual inventory system,the amount of inventory is not known until the end of the period when the inventory count is taken.
B)In a perpetual inventory system,cost of goods sold is recorded at the time of each sale during the accounting period.
C)In a periodic inventory system,cost of goods sold is developed only from a comparison of beginning inventory and ending inventory.
D)In a periodic inventory system,the inventory account is increased for each purchase during the accounting period.

Question

Quizplus · Accepted Answer

In a perpetual inventory system, cost of goods sold is recorded at the time of each sale during the accounting period, while the inventory balance is continuously updated. In contrast, in a periodic inventory system, cost of goods sold is developed by taking a physical inventory at the end of the period and subtracting the cost of goods on hand at the beginning of the period from the cost of goods available for sale during the period. The inventory account is updated only at the end of the period in a periodic inventory system. Choice A is incorrect because in a perpetual inventory system, inventory balance is continuously updated and known in real-time. Choice C is incorrect because periodic inventory system also takes into account purchases made during the period to calculate cost of goods available for sale. Choice D is incorrect because the inventory account is updated only at the end of the period in a periodic inventory system, not for each purchase during the period.

Which of the Following Statements Is Correct Regarding Either the Perpetual