Which of the Following Does Not Correctly Describe a Perpetual

question 73

Multiple Choice

Which of the following does not correctly describe a perpetual inventory accounting system?

• A)In a perpetual system cost of goods sold are calculated every time a sale is made.
• B)In a perpetual system, assuming shrinkage of zero, inventory and cost of goods sold do not have to be updated at the end of the period.
• C)The use of this system eliminates the requirement for an annual physical inventory
• D)In a perpetual system, assuming a FIFO cost flow, the cost of goods sold would equal those from a periodic system

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Definitions:

Ability-To-Pay Principle

The idea that those who have greater income (or wealth) should pay a greater proportion of it as taxes than those who have less income (or wealth).

Marginal Cost

the additional cost incurred to produce one more unit of a good or service.

Marginal Benefit

The added joy or utility one achieves by consuming an additional unit of a product or service.

Cost-Benefit Analysis

is a systematic approach to estimating the strengths and weaknesses of alternatives, used to determine the best option through weighing the cost against benefits.