Physical counts of inventory:
A) Are not necessary under the perpetual system.
B) Are necessary to adjust the Inventory account to the actual inventory available.
C) Must be taken at least once a month.
D) Requires the use of hand-held portable computers.
E) Are not necessary under the cost-to benefit constraint.

Question

Quizplus · Accepted Answer

Physical counts of inventory are necessary under the perpetual system to adjust the Inventory account to the actual inventory available. This helps in maintaining accurate records of inventory and ensures that the financial statements reflect the true value of inventory on hand. While physical counts may not be required as frequently as once a month, they should be done on a regular basis to ensure inventory accuracy. Hand-held portable computers may be used to aid in the physical count process but are not mandatory. The cost-to-benefit constraint does not apply to the necessity of physical counts, as accurate records of inventory are crucial for financial reporting.

Physical Counts of Inventory