Which of the Following Statements Regarding Inventory Counts Is Not

question 43

Multiple Choice

Which of the following statements regarding inventory counts is not true?

• A)Companies need to perform a physical count of their inventory at least yearly regardless of which inventory system is being used.
• B)A perpetual inventory system does not require a physical count during the accounting period to determine cost of goods sold.
• C)In a perpetual inventory system,the inventory count is compared to the inventory account balance to reveal shrinkage.
• D)If a company uses a perpetual inventory system and the inventory count at the end of the accounting period is greater than the balance in the inventory ledger account,there must have been shrinkage.

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Definitions:

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.

Present Value

The contemporary value of a forthcoming sum of money or cash flow series, adjusted for a specific rate of return.

Cash Flow Stream

A series of cash inflows and outflows over a period of time, often used in financial analysis and investment decisions.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.