Which of the following statements regarding inventory counts is not correct?
A)Companies need to perform a physical count of their inventory at least yearly regardless of which inventory system is being used.
B)A perpetual inventory system does not require a physical count during the accounting period to determine cost of goods sold.
C)In a perpetual inventory system,the inventory count is compared to the inventory account balance to reveal shrinkage.
D)If a company uses a perpetual inventory system and the inventory count at the end of the accounting period is greater than the balance in the inventory ledger account,there must have been shrinkage.

Question

Quizplus · Accepted Answer

Inventory counts are necessary in both periodic and perpetual inventory systems.Shrinkage is indicated if the inventory count is less than the inventory ledger account balance.In a perpetual inventory system,cost of goods sold is determined at the time of each sale,so a physical count is not necessary during the period.

Which of the Following Statements Regarding Inventory Counts Is Not