For Companies That Use a Perpetual Inventory System, All of the Following

question 136

Multiple Choice

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except

• A)to check the accuracy of the records.
• B)to determine the amount of wasted raw materials.
• C)to determine losses due to employee theft.
• D)to determine ownership of the goods.

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Definitions:

Prepaid Expenses

Costs paid in advance for goods or services to be received in the future.

Total Assets

The sum of all assets owned by a company, both current and non-current, used to calculate the company's financial health.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account.

Sales Revenues

Income received from selling goods or services over a period of time.