Describe how the perpetual inventory system works. What are someadvantages of using the perpetual inventory system? Is it necessaryto take physical inventory when using the perpetualsystem?
Describe how the perpetual inventory system works. What are someadvantages of using the perpetual inventory system? Is it necessaryto take physical inventory when using the perpetualsystem?
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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.