Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 29

For the following questions, circle the best respones.

The periodic and perpetual inventory systems share the following similarity:

a. The Cost of Goods Sold account is adjusted daily as sales are made under both systems.

b. The Purchases account is used under both systems.

c. Both systems can be used in conjunction with any of the cost-flow assumptions (FIFO, LIFO, or weighted average).

d. Under both systems, it is necessary to estimate gross profit ratios for sales made during the most recent month.

e. The cost of purchases is determined by an annual physical count under both systems.

Step 1 of 6

(a)

The Cost of Goods sold account is not used on a daily basis under the periodic inventory system. Rather, the total amount of COGS is determined at the end of the accounting period. Therefore, this is not a similarity between the periodic and perpetual inventory systems.