The Essence of the Perpetual Method of Accounting for Inventory

question 52

Multiple Choice

The essence of the perpetual method of accounting for inventory is:

• A) all movements in each item of stock are tracked via detailed inventory records.
• B) a stocktake is performed.
• C) cost of sales is calculated at the end of the accounting period.
• D) it is useful for high value, low volume items.

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Definitions:

Waiting in Line

The act of standing or queueing in a sequence for services or goods, usually in a sequential order.

Price Rationing

A method of allocating goods among buyers by charging a high enough price to decrease demand to match the supply.

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, leading to market balance.

Total Revenue

The total amount of money a firm receives from selling its goods or services.