The Two Basic Approaches to Accounting for Inventory and the Cost

question 128

Multiple Choice

The two basic approaches to accounting for inventory and the cost of goods sold are the perpetual inventory system and the periodic inventory system. (More than one of the following statements may be correct.)

• A) Most large merchandising companies and manufacturing businesses use periodic inventory systems.
• B) As a practical matter, a grocery store or a large department store could not maintain a perpetual inventory system without the use of point-of-sale terminals.
• C) In a periodic inventory system the cost of goods sold cannot be determined until a complete physical inventory is taken.
• D) In a perpetual inventory system, the Cost of Goods Sold account is debited promptly for the cost of merchandise sold.

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Definitions:

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The existing state of affairs, especially regarding social or political issues.

No Collar

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The equilibrium between personal life and professional work, where both are given equal priority to improve overall happiness and fulfillment.

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