Twice a year a firm's entire production line shuts down and a complete count is taken of every inventory item. This inventory system is called
A) cycle counting.
B) perpetual inventory.
C) physical inventory.
D) two-bin inventory.

Question

Quizplus · Accepted Answer

The inventory system described is physical inventory, as it involves a complete shutdown of the production line and count of all inventory items. Cycle counting involves counting a small subset of inventory items on a regular basis throughout the year, while perpetual inventory involves continuously updating inventory records as goods are bought and sold. Two-bin inventory is a method of tracking inventory levels by keeping two bins for each item: one full and one empty, with inventory being replenished when the full bin is empty. Therefore, physical inventory is the best choice for this scenario.

Twice a Year a Firm's Entire Production Line Shuts Down