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Explain When It Is Better to Use the Continuous Inventory

question 36

Essay

Explain when it is better to use the continuous inventory system and when it is better to use the periodic inventory system.Discuss how the ABC classification system provides guidance in selecting one versus the other.


Definitions:

Substitution Effect

The change in demand for a good or service caused by a change in its price, leading consumers to substitute it with other goods or services.

Income Effect

The change in consumer's purchasing power due to a change in real income, affecting the quantity of goods they can buy.

Price Change

A variation in the cost of goods and services in a market, influenced by factors such as supply and demand, inflation, or governmental policy.

Charitable Giving

The act of giving money, goods, or time to the unfortunate, either directly or by means of a charitable trust or other worthy cause.

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