The primary difference between a periodic and perpetual inventory system is that a periodic systemA) keeps a record showing the inventory on hand at all time. B) provides better control over inventories. C) records the cost of the sale on the date the sale is made. D) determines the inventory on hand only at the end of the accounting period.

Question

Business

Lowery

2 June, 02:08

The primary difference between a periodic and perpetual inventory system is that a periodic systemA) keeps a record showing the inventory on hand at all time. B) provides better control over inventories. C) records the cost of the sale on the date the sale is made. D) determines the inventory on hand only at the end of the accounting period.

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Soren Floyd · Answer 1

D) determines the inventory on hand only at the end of the accounting period.

Explanation:

Due to the fact of inflation, change of prices over time, a periodic inventory system does not provide a better record over the cost of inventory because it is only determined once in the accounting period, usually at the end of it.

Meanwhile, a perpetual inventory system keeps a record showing the inventory at all time. That is every time a sale is made, cost of goods sold (cogs) is determined.

So if a business does not need to wait until the end of the accounting period to check (cogs), it is better to use a perpetual system.