Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

5. Inventory

Physical Inventory Count, Ownership of Goods, and Consigned Goods

Financial Accounting

5. Inventory

Physical Inventory Count, Ownership of Goods, and Consigned Goods

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Multiple Choice

Which inventory system requires a physical count of items in inventory to be made at periodic intervals?

Periodic inventory system

Perpetual inventory system

Consignment inventory system

Just-in-time inventory system

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Verified step by step guidance

Understand the concept of inventory systems: Inventory systems are methods used by businesses to track and manage their stock. The main types include periodic inventory system, perpetual inventory system, consignment inventory system, and just-in-time inventory system.

Define the periodic inventory system: This system requires businesses to physically count their inventory at specific intervals, such as monthly, quarterly, or annually. It does not continuously track inventory levels.

Compare with the perpetual inventory system: The perpetual inventory system continuously updates inventory records after each transaction, eliminating the need for periodic physical counts.

Consider the consignment inventory system: In this system, inventory is owned by one party but stored and sold by another. Physical counts may be required, but this is not the defining feature of the system.

Evaluate the just-in-time inventory system: This system minimizes inventory levels by ordering goods only as needed for production or sales. It focuses on efficiency rather than periodic physical counts.