The Primary Difference Between the Periodic and Perpetual Inventory Systems

question 68

Multiple Choice

The primary difference between the periodic and perpetual inventory systems is:

• A)The reported amount of ending inventory is higher under the periodic system.
• B)The perpetual system maintains a continual record of inventory transactions,whereas the periodic system records these transactions only at the end of the period.
• C)The reported amount of sales revenue is higher under the periodic inventory system.

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Definitions:

Interest Rate

The cost of borrowing money or the return on investment for savings, usually expressed as a percentage.

Utility Function

A mathematical representation of how different quantities of goods or services increase a consumer's satisfaction or happiness.

Risk Averse

A description of an individual or entity's preference to avoid risk, choosing certainty over potential higher rewards that come with greater risk.

Profitability

A financial metric indicating the extent to which a person or business generates more revenue than the costs incurred in producing its goods or services.