Which of the Following Is Not True of the Periodic

question 1

Multiple Choice

Which of the following is not true of the periodic inventory system?

• A) It uses a purchases account.
• B) It identifies inventory variances.
• C) It is the simplest system.
• D) Cost of sales can be calculated only after a physical stocktake.

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Definitions:

Operating Cycle

The amount of time it takes for a company to purchase inventory, sell the products, and collect cash from customers.

Held-to-maturity Debt Security

A classification for debt securities which the investor has the intent and ability to hold until they mature.

Amortized

The process of spreading out loan payments over time in equal installments, covering both principal and interest.