Which of the Following Statements Regarding Inventory Counts Is Not

question 149

Multiple Choice

Which of the following statements regarding inventory counts is not correct?

• A)Companies need to perform a physical count of their inventory at least yearly regardless of which inventory system is being used.
• B)A perpetual inventory system does not require a physical count during the accounting period to determine cost of goods sold.
• C)In a perpetual inventory system,the inventory count is compared to the inventory account balance to reveal shrinkage.
• D)If a company uses a perpetual inventory system and the inventory count at the end of the accounting period is greater than the balance in the inventory ledger account,there must have been shrinkage.

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Definitions:

Monopolistically Competitive

A marketplace setup in which various enterprises deal in goods that are alike but not identical, affording them some degree of control in the market.

Cost Curves

Graphical representations showing the relationship between the cost of producing goods or services and the quantity produced.

Optimal Scale

The size of a company or level of production that minimizes costs and maximizes efficiency and profit.

Long-run Equilibrium

A state in which all inputs can be adjusted by firms, market supply meets demand, and no economic profit is earned by firms in a perfectly competitive market.