Which of the following does NOT correctly describe a perpetual inventory system?
A) Cost of goods sold is calculated every time a sale is made.
B) Assuming shrinkage of zero, inventory and cost of goods sold do not have to be updated at the end of the period.
C) The use of this system eliminates the requirement for an annual physical inventory count.
D) Assuming a FIFO cost flow, cost of goods sold would equal that calculated by the periodic system.

Question

Quizplus · Accepted Answer

A perpetual inventory system does not eliminate the requirement for an annual physical inventory count. While this system tracks inventory and cost of goods sold in real-time, an actual count is necessary to ensure accuracy and identify any discrepancies.

Which of the Following Does NOT Correctly Describe a Perpetual