Which of the following are characteristics of a periodic inventory system?
A) The system does not maintain a continuous record.
B) Management knows how much inventory is on hand at all times.
C) The computer tracks inventory upon a sale and the cost of goods and inventory are immediately updated.
D) Purchases of inventory are recorded to the inventory account.

Question

Quizplus · Accepted Answer

A periodic inventory system does not maintain a continuous record of inventory levels. Instead, inventory levels are only updated at the end of a specified period, such as monthly or quarterly.

Answer: D 
 Purchases of inventory are recorded to the inventory account under both periodic and perpetual inventory systems. However, under a periodic inventory system, the amount of inventory on hand is only updated periodically, rather than continuously.

Therefore, choices B and C are characteristics of a perpetual inventory system, not a periodic inventory system.

Which of the Following Are Characteristics of a Periodic Inventory