Which of the Following Statements Regarding Periodic Versus Perpetual Inventory

question 48

Multiple Choice

Which of the following statements regarding periodic versus perpetual inventory systems is true?

• A) Periodic inventory systems provide a superior means of determining optimal times to reorder merchandise.
• B) Periodic inventory systems require a greater investment in technology to implement them.
• C) Perpetual inventory systems may assist in determining inventory lost due to shrinkage.
• D) Periodic inventory systems allow sales personnel to provide more immediate information regarding availability of inventory.

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Definitions:

Effective-Interest Amortization

A method of amortizing a bond discount or bond premium that reflects the effective interest rate a company pays bondholders over the life of a bond.

Coupon Interest Rate

The annual interest rate paid by a bond expressed as a percentage of its face value.

Present Value Factor

A factor used to calculate the present value of a sum to be received in the future, considering a specific interest rate over a certain period.

Premium Amortization

The gradual reduction of the premium paid above the face value of a bond, allocated over the bond's life until maturity.