When a periodic inventory system is used a. both revenue and cost of goods sold are recorded each time a sale is made. b. only the cost of goods sold is recorded each time a sale is made. c. only the reduction of inventory is recorded each time a sale is made. d. only revenue is recorded each time a sale is made.

Question

Business

Jade Kemp

28 May, 17:15

When a periodic inventory system is used a. both revenue and cost of goods sold are recorded each time a sale is made. b. only the cost of goods sold is recorded each time a sale is made. c. only the reduction of inventory is recorded each time a sale is made. d. only revenue is recorded each time a sale is made.

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Answers (1)

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Salvatore Hale · Answer 1

D) only revenue is recorded each time a sale is made.

Explanation:

When a company uses a periodic inventory system, the cost of goods sold is calculated only after the physical inventory count is completed. This physical count is done periodically and may happen once every few months or even once a year.

The periodic system is obsolete nowadays and cheaper technological solutions make it easier for companies to use a perpetual inventory system which is much better in every possible way.