Which of the following is a characteristic of aperpetual inventory system?a) Inventory records are updated continuouslyb) Cost of goods sold is calculated at the end of theperiodc) Inventory is only counted at year-endd) Physical counts are never required

Explanation of Perpetual Inventory System: A perpetual inventory system is a method of tracking…

Answered: Which of the following is a…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 12MC: Which of the following financial statements would be impacted by a current-year ending inventory...

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Prepare Journal entries to record the following transactions, assuming perpetual inventory updating, and last-in, first-out (LIFO) cost allocation. Assume no beginning inventory.
Which of the following describes features of a perpetual inventory system? A. Technology is normally used to record inventory changes. B. Merchandise bought is recorded as purchases. C. An adjusting journal entry is required at year end, to match physical counts to the asset account. D. Inventory is updated at the end of the period.
Which of the following would cause periodic ending inventory to be overstated? A. Goods held on consignment are omitted from the physical count. B. Goods purchased and delivered, but not yet paid for, are included in the physical count. C. Purchased goods shipped FOB destination and not yet delivered are included in the physical count. D. None of the above
This type of inventory system does not require an entry to Merchandise Inventory until a physical inventory has been taken. a. Periodic inventory system b. Perpetual inventory system c. Merchandise inventory system d. Beginning inventory system e. Ending inventory system
Prepare journal entries to record the following transactions, assuming perpetual inventory updating and first-in, first-out (FIFO) cost allocation. Assume no beginning inventory.
LO2 Under the perpetual system of accounting for inventory, the current merchandise inventory and the cost of goods sold are not determined until the end of the accounting period when a physical inventory is taken.
What is the difference in reporting requirements for customer-returned merchandise in sellable condition under a perpetual inventory system versus a periodic inventory system?
Perpetual and Periodic Inventory Systems Below is a list of inventory systems options. a. Perpetual inventory system b. Periodic inventory system c. Both perpetual and periodic inventory systems Required: Match each option with one of the following: 1. Only revenue is recorded as sales are made during the period; the cost of goods sold is recorded at the end of the period. 2. Cost of goods sold is determined as each sale is made. 3. Inventory purchases are recorded in an inventory account. 4. Inventory purchases are recorded in a purchases account. 5. Cost of goods sold is determined only at the end of the period by subtracting the cost of ending inventory from the cost of goods available for sale. 6. Both revenue and cost of goods sold are recorded during the period as sales are made. 7. The inventory is verified by a physical count.
How long does it take an inventory error affecting ending inventory to correct itself in the financial statements? Explain.
Errors A company that uses the periodic inventory system makes the following errors: 1. It omits a purchase on credit from the purchases account and the ending inventory. 2. It omits a purchase on credit from the purchases account, but the ending inventory is correct. 3. It overstates the ending inventory, but purchases arc correct. Required: Indicate the effect of the preceding errors on the income statement and the balance sheet of the current and succeeding years.
Which inventory costing method is almost always done on a perpetual basis? A. specific identification B. first-in, first-out C. last-in, first-out D. weighted average
Perpetual versus Periodic Inventory Systems Graham Company is trying to select an inventory system. Below are several statements that pertain to inventory systems. 1. Cost of goods sold is only determined at the end of the period after a physical count of inventory. 2. A physical count of inventory is performed. 3. Purchases of inventory are recorded in a purchases account. 4. Cost of goods sold is determined continually during the period as sales are made. 5. Greater control over inventory is possible. 6. This inventory system is relatively inexpensive to operate. Required: Select the inventory system, perpetual or periodic, that is best represented by each statement. If the statement applies to both systems, select both.

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Which of the following is a characteristic of a perpetual inventory system? a) Inventory records are updated continuously b) Cost of goods sold is calculated at the end of the period c) Inventory is only counted at year-end d) Physical counts are never required