Multiple Choice
Which of the following statements best describes how Cost of Goods Sold (COGS) is determined under the perpetual inventory system compared to the periodic inventory system?
111
views
4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
Multiple Choice
Which of the following is NOT a benefit of using a computerized perpetual inventory system?
A
Provides real-time inventory balances
B
Eliminates the need for physical inventory counts
C
Facilitates timely detection of inventory shortages
D
Improves accuracy in recording inventory transactions
Verified step by step guidance1
Understand the concept of a computerized perpetual inventory system: This system continuously updates inventory records in real-time as transactions occur, providing accurate and timely information about inventory levels.
Analyze the benefits listed in the question: Real-time inventory balances, timely detection of inventory shortages, and improved accuracy in recording inventory transactions are all advantages of a computerized perpetual inventory system.
Consider the statement 'Eliminates the need for physical inventory counts': While a computerized system provides real-time data, physical inventory counts are still necessary to verify the accuracy of the system and account for discrepancies such as theft, damage, or human error.
Identify the correct answer: The statement 'Eliminates the need for physical inventory counts' is NOT a benefit of using a computerized perpetual inventory system because physical counts are still required periodically.
Conclude that the correct answer is the option that contradicts the necessity of physical inventory counts, as computerized systems complement but do not replace physical verification processes.
Related Videos
Related Practice
