Which of the Following Statements Is Correct

question 21

Multiple Choice

Which of the following statements is correct?

• A) The periodic inventory system provides superior managerial information and internal control.
• B) The perpetual inventory system is simpler and less expensive than the periodic inventory system.
• C) Profit and inventory values are the same under the perpetual inventory system and the periodic inventory system,as long as the basic data do not show any inflation or deflation.
• D) The perpetual inventory system is only used in small companies.

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Definitions:

Consolidation Entry TI

A specific type of journal entry made during the consolidation process to integrate the financial activities of a parent company and its subsidiaries.

Consolidation Entry G

An accounting entry used in consolidation to eliminate the effects of intercompany transactions among entities within a consolidated group for external reporting.

Wholly Owned Subsidiary

A company whose entire share capital is held by another company, making it a completely controlled entity of the parent company.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted for the investor's share of the investee's profit or loss.