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 an example of a perpetual inventory system for inventory management?

Inventory purchases are recorded only when payment is made to suppliers.

Inventory records are updated continuously with each purchase and sale.

Inventory is counted only at the end of the accounting period.

Inventory is adjusted only when a physical count reveals discrepancies.

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Verified step by step guidance

Understand the concept of a perpetual inventory system: A perpetual inventory system continuously updates inventory records in real-time as transactions occur, including purchases and sales.

Compare the options provided in the problem to the definition of a perpetual inventory system.

Option 1: 'Inventory purchases are recorded only when payment is made to suppliers' - This does not align with the perpetual inventory system, as it focuses on payment rather than real-time updates.

Option 3: 'Inventory is counted only at the end of the accounting period' - This describes a periodic inventory system, not a perpetual one.

Option 4: 'Inventory is adjusted only when a physical count reveals discrepancies' - This is also characteristic of a periodic inventory system. The correct answer is Option 2: 'Inventory records are updated continuously with each purchase and sale,' which matches the definition of a perpetual inventory system.