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

Periodic Inventory - Purchasing Summary

Financial Accounting

4. Merchandising Operations

Periodic Inventory - Purchasing Summary

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Multiple Choice

A disadvantage of the fixed-period inventory system is that:

Inventory levels may run out before the next review period, leading to stockouts.

It automatically adjusts order quantities based on real-time sales data.

It eliminates the need for physical inventory counts.

It requires continuous monitoring of inventory after every transaction.

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Verified step by step guidance

Understand the concept of a fixed-period inventory system: This system involves reviewing inventory levels at regular intervals (e.g., weekly, monthly) and placing orders to replenish stock based on the review.

Identify the disadvantage of this system: Since inventory is only reviewed periodically, there is a risk that stock may run out before the next review period, leading to stockouts.

Compare the options provided: Evaluate each option to determine which one aligns with the disadvantage of the fixed-period inventory system.

Option analysis: The correct disadvantage is 'Inventory levels may run out before the next review period, leading to stockouts.' The other options describe features of different inventory systems, such as real-time adjustments, elimination of physical counts, or continuous monitoring.

Conclude: The fixed-period inventory system's disadvantage is the potential for stockouts due to the periodic nature of inventory reviews, which may not account for unexpected demand fluctuations.