Which of the Following Does NOT Correctly Describe a Perpetual

question 305

Multiple Choice

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

• A)Cost of goods sold is calculated every time a sale is made.
• B)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 count.
• D)Assuming a FIFO cost flow, cost of goods sold would equal that calculated by the periodic
• System.

---

Definitions:

Indirect Material

Materials used in the support of the production process but not directly a part of the finished product.

Period Cost

Costs that are expensed in the period in which they are incurred, not directly tied to the production of goods or services.

Goals Met

A term indicating the achievement of predefined objectives or targets.

Planning

The process of outlining business goals, strategies, and actions to achieve desired outcomes.