which statement is true for periodic inventory systems? course hero

What is periodic inventory system?

A periodic inventory system is a commonly used alternative to a perpetual inventory system. Because the physical accounting for all goods and products in stock is so time-consuming, most companies conduct them intermittently, which often means once a year, or maybe up to three or four times per year.

When is the cost of merchandise sold determined in a periodic inventory?

Freight-In Inventory Purchases Freight-out Freight-In In a periodic inventory system, when is the cost of the merchandise sold determined? Periodically during the period Either at time of sale, end of period or periodically during the period At the time of the sale At the end of the period At the end of the period

What are the types of inventory system?

Periodic inventory system Double entry inventory system Perpetual inventory system Single entry inventory system Periodic inventory system To what is the gross profit rate equal? Net sales minus cost of goods sold, divided by net sales

What is the difference between periodic and perpetual inventory?

A perpetual inventory system provides better control over inventories than does a periodic inventory system. When credit terms of 1/15, n/60 are offered, how long is the discount period? 60 days 45 days 1 day 15 days 15 days

When using the periodic system, what is the physical inventory count used to determine?

When using the periodic system the physical inventory count is used to determine. only the sales value of goods in the ending inventory. only the cost of merchandise sold during the period. both the cost of the goods in ending inventory and the sales value of goods sold during the period.

What is the difference between a perpetual and periodic inventory system?

A perpetual inventory system computes cost of goods sold only at the end of the accounting period. A periodic inventory system computes cost of goods sold each time a sale occurs. A perpetual inventory system provides better control over inventories than does a periodic inventory system.

What is LIFO inventory method?

The LIFO inventory method assumes that the cost of the latest units purchased are. the last to be allocated to cost of goods sold. the first to be allocated to cost of goods sold. the first to be allocated to ending inventory. not allocated to cost of goods sold or ending inventory.

How many journal entries does a company need to use a perpetual inventory system?

A company which uses a perpetual inventory system needs two journal entries when it sells merchandise. A company which uses a perpetual inventory system debits inventory and credits cost of goods sold when it sells merchandise. None of the answer choices are correct.

What does the cost of the earliest units purchased assume?

It assumes that the cost of the earliest units purchased are the last to be allocated to the beginning inventory. It assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold. It assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold.

What has increased the use of the periodic system?

The increased use of computerized systems has increased the use of the periodic system.

Which system provides better control over inventories?

The periodic system provides better control over inventories than a perpetual system. Companies determine cost of goods sold only at the end of the accounting period. The increased use of computerized systems has increased the use of the periodic system.

What is periodic inventory?

What is the Periodic Inventory System? The periodic inventory system refers to conducting a physical inventory. Inventory Inventory is a current asset account found on the balance sheet, consisting of all raw materials, work-in-progress, and finished goods that a. count of goods/products on a scheduled basis.

Why are physical inventories necessary?

It is why physical inventories are necessary, to accurately reflect how many tangible goods are in a store or storage area. After a periodic inventory count, the purchase account records are changed to reflect the accurate monetary accounting of goods based on the number of goods that are physically present.

What is total inventory value?

The total inventory value is the cost (or total price) of goods that are able to be sold – minus the total number of goods sold between physical inventories. The physical inventory count is then completed, and compared to the value calculated. Any differences are then expensed to the cost of goods sold account.

What is the starting inventory?

Starting inventory (based on the last physical inventory) plus the total number of purchases made within the period between the previous physical inventory and the next physical inventory is equal to the total amount of the goods that are available to be sold. The total inventory value is the cost ...

How often do companies conduct stock accounting?

Because the physical accounting for all goods and products in stock is so time-consuming, most companies conduct them intermittently, which often means once a year, or maybe up to three or four times per year.