Under the periodic inventory system
A)the cost of each item is recorded in the Merchandise Inventory account when it is purchased.
B)when an inventory item is sold,its cost is transaferred to the Cost of Goods Sold account.
C)the balance of the Merchandise Inventory account equals the cost of goods on hand.
D)the balance of the Merchandise Inventory account is only accurate on the balance sheet date.

Question

Quizplus · Accepted Answer

Under the periodic inventory system, the Merchandise Inventory account is updated at the end of the accounting period, not when each item is purchased or sold. Therefore, its balance is only accurate after adjustments are made at the end of the period, typically during inventory counts, making option D correct. Options A, B, and C describe processes more aligned with the perpetual inventory system.

Under the Periodic Inventory System