Physical inventory counts:
A)Are not necessary under the perpetual system.
B)Are necessary to measure and adjust for inventory shrinkage.
C)Must be taken at least once a month.
D)Require the use of hand-held portable computers.
E)Are not necessary under the cost-to benefit constraint.

Question

Quizplus · Accepted Answer

Physical inventory counts are necessary to measure and adjust for inventory shrinkage, which is the loss of inventory due to theft, damage, or errors. The perpetual system may provide continuous inventory records, but it does not address inventory shrinkage. Monthly physical inventory counts are a common practice, but the frequency may vary depending on the size and complexity of the inventory and the cost-to-benefit tradeoff. Hand-held portable computers may be used to facilitate the count, but they are not required. The cost-to-benefit constraint requires a balance between the cost of taking a physical inventory count and the benefits of accurate inventory records and prevention of inventory shrinkage.

Physical Inventory Counts