The Primary Difference Between a Periodic and Perpetual Inventory System

question 186

Multiple Choice

The primary difference between a periodic and perpetual inventory system is that a periodic system

• A)keeps a record showing the inventory on hand at all time.
• B)provides better control over inventories.
• C)records the cost of the sale on the date the sale is made.
• D)determines the inventory on hand only at the end of the accounting period.

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Definitions:

Consolidation Worksheet

A tool used in preparing consolidated financial statements that combines the assets, liabilities, and equity of a parent company and its subsidiaries.

Par Value

The nominal or face value of a bond, share of stock, or another financial instrument, as stated by the issuing company.

Fair Value

The capital acquired from the sale of an asset or expended in the transfer of a liability in a smooth transaction among market intermediaries on the measurement date.

Acquisition

The process by which one company takes over the control of or purchases another company.