### Taking a Physical Count of InventoryWhen managing inventory, determining when a physical count is necessary can depend on several factors. Understanding these factors and their implications can help maintain accurate inventory records. Below are options discussing different scenarios for taking a physical count of inventory:1. **a.** is not necessary when a perpetual inventory system is used2. **b.** has no internal control relevance3. **c.** is not necessary when a periodic inventory system is used4. **d.** should be done near year-endEach option presents a different viewpoint on when or whether a physical count of inventory is needed, highlighting the relevance and expectations of inventory management systems.**Explanation:**- **Perpetual Inventory System:** This system continuously updates inventory records with each transaction (i.e., purchases and sales). However, even with a perpetual system, periodic physical counts are often performed to ensure accuracy and detect any discrepancies (Option a).- **Internal Control Relevance:** Conducting physical counts is an essential internal control mechanism to verify records' accuracy and prevent theft or losses. The statement that it has no internal control relevance (Option b) is misleading.- **Periodic Inventory System:** This system does not continuously update inventory records. Instead, updates occur at specific intervals, usually requiring physical counts at those times. Thus, the idea that it is unnecessary (Option c) is incorrect.- **Year-End Count:** It is common practice to conduct a physical inventory count near the year-end to ensure accurate financial reporting and inventory valuation (Option d).Understanding these practices helps in maintaining effective inventory management and ensuring the integrity of financial data.

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Description: ### Taking a Physical Count of InventoryWhen managing inventory, determining when a physical count is necessary can depend on several factors. Understanding these factors and their implications can help maintain accurate inventory records. Below are

Under the perpetual inventory system, inventory is recorded on every inventory transaction. So a…

Business

Accounting

Taking a physical count of inventory Oa. is not necessary when a perpetual inventory system is used Ob. has no internal control relevance Oc. is not necessary when a periodic inventory system is used Od. should be done near year-end

Taking a physical count of inventory Oa. is not necessary when a perpetual inventory system is used Ob. has no internal control relevance Oc. is not necessary when a periodic inventory system is used Od. should be done near year-end

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject: acounting
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