When a Perpetual Inventory System Is Used

question 36

Multiple Choice

When a perpetual inventory system is used,

• A)a physical inventory count must be taken to determine cost of goods sold.
• B)inventory shrinkage is difficult to determine.
• C)it eliminates the need for frequent inventory counts.
• D)the timeliness of data is sacrificed for lower costs of operation.

---

Definitions:

Privity

A legal concept indicating a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty.

Due Diligence

The investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract.

Accountant-Client Privilege

A legal principle that protects communications between a certified accountant and their client from being disclosed without the client's permission.

Statutorily Recognize

Formally acknowledged or established by law or statute.