When a Perpetual Inventory System Is Used

question 59

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)the cost of each item sold must be known.
• D)timeliness of data is sacrificed for lower costs of operation.

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Definitions:

Building Appraised

The process of determining the estimated market value of a building by a professional appraiser.

Account Payable

Obligations or debts a company owes to suppliers or creditors for goods or services received that have not yet been paid for.

Increases Liabilities

Situations or transactions that result in a rise in the claims against a company’s assets.

Decreases Assets

Refers to any operation or transaction that results in a reduction of the value of assets owned by a business.