When a Company Uses the Periodic Inventory System,which of the Following

question 130

Multiple Choice

When a company uses the periodic inventory system,which of the following is true?

• A)Purchases are recorded in the cost of goods sold account.
• B)The inventory account is updated after each sale.
• C)Cost of goods sold is computed at the end of the accounting period rather than at each sale date.
• D)The inventory account is updated throughout the year as purchases are made.

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Definitions:

Payables Turnover

A financial ratio that measures how quickly a company pays its suppliers by comparing net credit purchases with the average accounts payable over a period.

Cash Cycle

The period it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, often used to assess the efficiency of inventory management.

Accounts Receivable Turnover

A measure of how efficiently a company collects its outstanding credit sales, calculated as sales divided by average accounts receivable.