Taking a physical count of inventory
A) is not necessary when a periodic inventory system is used
B) should be done near year-end
C) has no internal control relevance
D) is not necessary when a perpetual inventory system is used

Question

Quizplus · Accepted Answer

Taking a physical count of inventory should be done near year-end to ensure that the inventory balance reported on the financial statements is accurate. This allows for any discrepancies between the physical count and the recorded inventory balance to be identified and adjusted. Option A and D are incorrect because a physical count is necessary for both periodic and perpetual inventory systems to ensure accuracy. Option C is incorrect because physical inventory counts have internal control relevance, as they help to prevent and detect inventory theft or fraud.

Taking a Physical Count of Inventory