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Under a Perpetual Inventory System,is It Necessary to Take a Physical

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Essay

Under a perpetual inventory system,is it necessary to take a physical inventory at the end of the period? Why or why not?


Definitions:

Fixed Costs

Expenditures that do not vary with the level of activity or production within a short time frame.

Variable Costs

Expenses that change in proportion to the activity of a business, such as raw materials and direct labor costs.

Total Dollar Amount

The complete sum of money involved in a transaction, including all costs and taxes.

Level of Activity

A measure used in accounting and production to determine the extent to which a business operation is being utilized, often influencing cost behavior.

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