When a Company Is Evaluating Whether or Not to Use

question 24

Multiple Choice

When a company is evaluating whether or not to use a perpetual vs.a periodic inventory system the following statement is most accurate:

• A)A perpetual inventory system provides far superior information and should be used at any cost.
• B)A periodic system is inferior and should never be used if possible.
• C)The cost of the system used should be measured against the benefits it provides.
• D)Both systems are equally good.

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Definitions:

Net Operating Income

The income earned from a company's activities once operational costs have been deducted from revenues generated from operations.

Price Reduction

A decrease in the selling price of goods or services, often to increase demand or sales volume.

High Pressure Pump

A type of pump designed to move fluids under high pressure, commonly used in hydraulic systems, water supply, and oil and gas applications.

Useful Life

The estimated period that an asset is expected to be functional and contribute to a company's operations.