In a periodic inventory system

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In a periodic inventory system, the company does not maintain a continuous record of the amount of inventory on hand. Instead, the cost of merchandise on hand is determined by relating the quantities on hand to records showing each item's original cost. This is typically done through a physical count at the end of the accounting period. The company records the cost of new merchandise in the temporary Purchases account, which is closed to the permanent Inventory account at the end of the period. Therefore, options A, C, D, and E are incorrect.

In a Periodic Inventory System