Computer Software Used in a Perpetual Inventory System

question 35

Multiple Choice

Computer software used in a perpetual inventory system:

• A) still requires an inventory count on hand annually
• B) makes journal entries for the cost of goods sold unnecessary
• C) completely eliminates the need to physically count inventory
• D) makes journal entries for inventory purchases unnecessary

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Definitions:

Adjusted Trial Balance

A list of all account balances in the general ledger after adjustments, used to prepare financial statements and ensure the accuracy of the accounts.

Income Statement

The income statement, also known as a profit and loss statement, provides a summary of a company's revenues, costs, and expenses incurred during a specific period, illustrating the company's financial performance.

Statement of Retained Earnings

A financial document that summarizes the changes in retained earnings for a specific period, factoring in net income and dividends paid.

Adjusted Trial Balance

A list of all accounts and their final balances after adjusting entries have been made, used to prepare financial statements.