Which of the following is correct for the use of the average cost method with a perpetual system?
A)A weighted-average cost is calculated at year end.
B)A new unit cost is calculated each time a sale is made.
C)A new unit cost is calculated each time a purchase is made.
D)All of these.

Question

Quizplus · Accepted Answer

With a perpetual system, the average cost method recalculates the unit cost each time a purchase is made and uses it to value both the ending inventory and the cost of goods sold. This ensures that the inventory and COGS are valued at the most current unit cost, rather than waiting until year end or calculating a weighted-average cost.

Which of the Following Is Correct for the Use of the Average