Chapter 5, Problem 15QS

To determine

Concept introduction:

Periodic Inventory system: In this system, the inventory and the cost of goods sold are updated at the end of the accounting period via closing entry. Purchase account and sales account are created in this system to record entries related to merchandise inventory.

Perpetual Inventory system: This method records the inventory and the cost of goods sold continuously on the occurrence of a sale or a purchase transaction.

To Determine: Whether the given statements best describe the periodic or the perpetual Inventory system.