ADM 1340 Lecture : Chapter 5 Lecture Notes

Which of the following statements about a periodic inventory system is true?

1. Companies continuously maintain detailed records of the cost of each inventory purchase and sale.
2. The periodic system provides better control over inventories than a perpetual system.
3. Companies determine cost of goods sold only at the end of the accounting period.
4. The increased use of computerized systems has increased the use of the periodic system.

Which of the following is a characteristic of a perpetual inventory system?

1. Inventory purchases are debited to the inventory

2. Inventory records are not kept for every item

3. Cost of goods sold is recorded for each sale

4. Cost of goods sold is determined as the number of purchases

Which of the following statements about a periodic inventory system is true?

a. The increased use of computerized systems has increased the use of periodic systems.

b. The periodic system provides better control over inventories than a perpetual system

c. The company continuously maintained detailed records of the cost of each purchase and sale.

d. Companies determine the cost of goods sold only at the end of the accounting period.