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

4. Merchandising Operations

Perpetual Inventory - Purchases

Financial Accounting

4. Merchandising Operations

Perpetual Inventory - Purchases

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Multiple Choice

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

It requires more record-keeping and can be costly to implement.

It does not provide up-to-date inventory information.

It eliminates the need for physical inventory counts.

It is less accurate than the periodic inventory system.

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Verified step by step guidance

Understand the perpetual inventory system: It is a method of tracking inventory in real-time, where updates are made to inventory records immediately after a sale or purchase transaction.

Identify the advantages of the perpetual inventory system: It provides up-to-date inventory information, reduces the risk of stockouts, and allows for better inventory management.

Analyze the disadvantages of the perpetual inventory system: It requires more record-keeping, advanced technology, and can be costly to implement due to the need for sophisticated software and systems.

Compare the perpetual inventory system with the periodic inventory system: The periodic system updates inventory records at specific intervals, which is less costly but does not provide real-time data.

Conclude that the correct disadvantage of the perpetual inventory system is its higher cost and complexity due to the need for continuous record-keeping and technology implementation.