Flores Department Store Currently Uses the Periodic Inventory System

question 203

Essay

Flores Department Store currently uses the periodic inventory system.
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Required
Explain what the advantages would be to Flores if it uses the perpetual inventory system.Assume that Flores can use a computer system that is linked to its cash registers and that all products have bar codes that can be read by bar code readers attached to the cash registers.

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Definitions:

Acquisition Differential

The difference between the purchase price of an acquired company and the fair value of its identifiable tangible and intangible assets.

Retained Earnings

The portion of net earnings not distributed as dividends but retained by the company to be reinvested in its core business or to pay debt.

Cost Method

An accounting method used to recognize investments in which the investor has no significant influence over the investee, recording the investment at cost and recognizing dividends as income.

Investment Income

Refers to the money earned from various types of investments, including dividends, interest, or rent.