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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.

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Trinidad Tremblay
Trinidad TremblayLv2
30 Apr 2020

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Related questions

1) A properly designed internal control system is a key part of accounting information systems' design, analysis, and performance. True False

2) The use of internal controls provides guaranteed protection against losses due to operating activities. True False

3) Good internal control dictates that a person who controls an asset should also maintain the accounting records for that asset. True False

4) Once a good system of internal control is in place, it rarely needs review. True False

5) Two important limitations of internal control systems are (1) human error or human fraud and (2) cost-benefit. True False

6)The main principles of internal control include which of the following:

Establish responsibilities.

Maintain minimal records.

Use only computerized systems.

Bond all employees.

Require automated sales systems.

7) A good system of internal control:

Urges adherence to prescribed managerial policies.

Insures profitable operations.

Eliminates the need for an audit.

Requires the use of noncomputerized systems.

Is not necessary if the company uses a computerized system.

8) A company's internal control system:

Eliminates the risk of loss.

Monitors and controls business activities.

Eliminates human error.

Eliminates the need for audits.

Is not necessary in large companies.

Boston Bait Shop uses a periodic inventory system. At December 31, year 2, the accounting records include the following information:

A complete physical inventory was taken at December 31. Year 2 indicates merchandise costing $3000 remains in stock.

a. how are the amounts of beginning and ending inventory determined?

b. Compute the amount of cost of goods sold in year 2.

c. Prepare two closing entries at December 31. Year 2: the first to create a cost of goods sold account with the appropriate balance and the second to bring the inventory account up to date.

d. Prepare a partial income statement showing the shop's gross profit for the year.Ā 

e. Describe why a company such as Boston Bait Shop would use a periodic inventory system rather than a perpetual inventory system.Ā 

Ā 

Scroll down to complete all parts of this task.

Select from the option list provided the inventory cost flowassumption for each explanation below. Each choice may be usedonce, more than once, or not at all.

Item Answer
1. Results in the highest cost of goods sold if prices arerising.
2. Unaffected by whether a perpetual or periodic system is usedif goods are not specifically identified.
3. Reflects the actual physical flow of goods.
4. Determines cost only at period end but usable in a perpetualsystem that records only quantities.
5. Ending inventory approximates current replacement cost.
6. Requires an estimate of price-level changes for specificinventories.

Scroll down to complete all parts of this task.

Select from the option list provided the inventory cost flowassumption for each explanation below. Each choice may be usedonce, more than once, or not at all.

Item Answer

1. Results in the highest cost of goods sold if prices arerising.

2. Unaffected by whether a perpetual or periodic system is usedif goods are not specifically identified.

3. Reflects the actual physical flow of goods.

4. Determines cost only at period end but usable in a perpetualsystem that records only quantities.

5. Ending inventory approximates current replacement cost.

6. Requires an estimate of price-level changes for specificinventories.

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