In a perpetual inventory system,the flow of inventory cost is:
A)First through the income statement,then through the balance sheet.
B)First through the balance sheet,then through the income statement.
C)Only through the balance sheet and not the income statement.
D)Only through the income statement and not the balance sheet.

Question

Quizplus · Accepted Answer

In a perpetual inventory system, the cost of inventory is recorded and updated continuously. As a result, the flow of inventory cost is first through the balance sheet, which reflects changes in the value of inventory, and then through the income statement, which shows the cost of goods sold. Therefore, option B - First through the balance sheet, then through the income statement - is the correct choice.

In a Perpetual Inventory System,the Flow of Inventory Cost Is