Which inventory system relies on regular physical counts of inventory to determine the ending inventory?Question 7Answera.Periodic inventory systemb.Perpetual inventory systemc.Just-in-time inventory systemd.Economic order quantity (EOQ) system
Question
Which inventory system relies on regular physical counts of inventory to determine the ending inventory?Question 7Answera.Periodic inventory systemb.Perpetual inventory systemc.Just-in-time inventory systemd.Economic order quantity (EOQ) system
Solution
The inventory system that relies on regular physical counts of inventory to determine the ending inventory is the Periodic inventory system.
Here's a step-by-step explanation:
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In a Periodic inventory system, the company does not keep detailed inventory records of the goods on hand throughout the period but updates the records periodically.
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This system requires businesses to conduct physical counts of all inventory items in stock at specific intervals, typically at the end of each quarter or year.
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The physical count is then used to determine the ending inventory level, and this figure is used in the company's financial statements.
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The cost of goods sold is also determined at the end of the accounting period in a periodic inventory system.
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This system contrasts with a perpetual inventory system, where updates are made continuously as sales or purchases occur.
So, the answer is a. Periodic inventory system.
Similar Questions
In a perpetual inventory system a physical inventory count is: Group of answer choices undertaken periodically to check the accuracy of the perpetual inventory system records. never required as inventory records are continuously updated. to identify losses or theft of inventory. to identify losses or theft of inventory and undertaken periodically to check the accuracy of the perpetual inventory system records.
The periodic inventory system refers to the periodic inventory counts that are performed by the entity. Which one of the following statements is classified as an advantage when using the periodic inventory system?Select one:a.Provides real-time information that could aid management in making important decisionsb.Reduces the need for physical inventory countsc.Greater control over inventoryd.Cost-efficient and easy to maintain
All descriptions reveal the characteristics of a periodic inventory system, EXCEPT:Group of answer choicescost of goods sold is determined at the end of the periodinventory record is always up-to-datemerchandise inventory account is set-up at the beginning and ending of accounting periodpurchases are recorded at costNext
Perpetual inventory system involves .a.bill of material and material requisition.b.bincard and stores ledger.c.purchase requisition and purchase order.d.inward and outward invoices.
explain the difference between a 'periodic inventory system' and a 'perpetual inventory system' and why a perpetual system provides more useful information than a periodic system. (3 marks)
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