Multiple Choice
In the context of the value chain, which of the following best represents the total cost for the production category?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
Multiple Choice
Which of the following inventory systems continuously updates inventory records for each purchase and sale of inventory?
A
Periodic inventory system
B
Specific identification method
C
Perpetual inventory system
D
Just-in-time inventory system
Verified step by step guidance1
Understand the concept of inventory systems: Inventory systems are methods used by businesses to track and manage their inventory levels. The two primary systems are the periodic inventory system and the perpetual inventory system.
Learn about the periodic inventory system: This system updates inventory records at specific intervals, such as at the end of an accounting period. It does not continuously track inventory changes during the period.
Understand the perpetual inventory system: This system continuously updates inventory records for each purchase and sale of inventory. It provides real-time tracking of inventory levels and is often supported by technology like barcode scanners and inventory management software.
Compare the perpetual inventory system with other methods: The specific identification method is a way to track individual items of inventory, but it is not an inventory system. The just-in-time inventory system is a strategy to minimize inventory levels, not a system for tracking inventory.
Conclude that the perpetual inventory system is the correct answer: Based on the definitions and characteristics, the perpetual inventory system is the one that continuously updates inventory records for each purchase and sale of inventory.
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