The Perpetual Inventory Method

question 45

Multiple Choice

The perpetual inventory method:

• A) is used by more and more companies, large and small due to increasing computerization.
• B) is not used by many companies today.
• C) is used by companies with a variety of merchandise with low unit prices.
• D) does not ever require a physical inventory.

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Definitions:

Break-Even Point

The point at which total costs and total revenues are exactly equal, resulting in no net profit or loss for a business.

Net Operating Income

The income from a company's primary business operations, excluding deductions of interest and taxes.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period of time, such as rent or salaries.

Break-Even Point

The level of production or volume of sales at which total costs and total revenue are equal, resulting in no net loss or gain.