When a Perpetual Inventory System Is Used

question 43

Multiple Choice

When a perpetual inventory system is used:

• A) Cost of goods sold is not a residual amount and its amount essentially is verifiable in the inventory records.
• B) Goods out on consignment are removed from inventory.
• C) There is apt to be less inventory control than when a periodic inventory system is used.
• D) One journal entry is made at the time merchandise is sold.

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Definitions:

Multiple Products

The strategy or situation of offering or managing a variety of different products instead of focusing on a single offering.

Postponement

A supply chain strategy that delays product customization or final assembly until customer orders are received, to reduce inventory costs and increase flexibility.

Uncertainty

A situation in which there is a lack of complete certainty about future events or outcomes, often leading to variability in performance or decision-making.

Positively Correlated

A relationship between two variables in which they move in the same direction, meaning that as one variable increases, the other also increases, and vice versa.