When a periodic inventory system is used:
A)inventory shrinkage is impossible to calculate.
B)timely data is of utmost importance.
C)cost of goods sold is always known.
D)every inventory transaction is reflected in the inventory account.

Question

Quizplus · Accepted Answer

In a periodic inventory system, inventory shrinkage (loss of inventory not accounted for by sales) is difficult to calculate accurately because inventory levels are not continuously updated. Inventory counts and cost of goods sold are only determined at the end of the accounting period through physical inventory counts, making it impossible to track shrinkage or know the cost of goods sold in real-time.

When a Periodic Inventory System Is Used