Describing periodic and perpetual inventory systems [10-15 min]
The following characteristics may be related to either periodic inventory or perpetual inventory systems or both.
A. | Purchases of inventory are journalized to an asset account at the time of purchase. |
B. | Purchases of inventory are journalized to an expense account at the time of purchase. |
C. | Inventory records are constantly updated. |
D. | Sales made require a second entry to be journalized to record cost of goods sold. |
E. | Bar code scanners that record sales transactions are most often associated with this inventory system. |
F. | A physical count of goods on hand at year end is required. |
Requirement
1. Identify each characteristic as one of the following:
a. Periodic inventory
b. Perpetual inventory
c. Both periodic and perpetual inventory
d. Neither periodic nor perpetual inventory
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