What Is the Major Difference Between a Periodic and a Perpetual

question 96

Multiple Choice

What is the major difference between a periodic and a perpetual inventory system?

• A) Under the periodic inventory system, the purchase of inventory will be debited to the purchases account.
• B) Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.
• C) Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month.
• D) All of these choices are correct.

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Definitions:

Bonds Payable

A long-term debt instrument issued by a corporation or government, promising to pay back with interest the money borrowed from investors.

Stockholder's Equity

What remains of a corporation's assets after liabilities are accounted for, denoting the interest of owners.

Long Term

Referring to assets, liabilities, or investments expected to last, or commitments expected to be active, for more than one year.

Treasury Bonds

Long-term government bonds issued by the U.S. Department of the Treasury, known for their safety and used by investors to diversify portfolios.