Under a Perpetual Inventory System

question 103

Multiple Choice

Under a perpetual inventory system

• A) accounting records continuously disclose the amount of inventory
• B) increases in inventory resulting from purchases are debited to Purchases
• C) there is no need for a year-end physical count
• D) the purchases returns and allowances account is credited when goods are returned to vendors

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Definitions:

Gross Negligence

A severe lack of care or concern for the safety or lives of others, significantly deviating from the behavior expected of a reasonable person under similar circumstances.

Fraudulent Misrepresentation

The act of intentionally deceiving another party with false information to induce them into a contract.

Bilateral Mistake

An error mutually made by two parties in a contract, potentially rendering the agreement invalid.

Material Fact

Any fact that is significant or essential to the matter at hand, which, if omitted or misrepresented, could influence a decision or outcome.