When a perpetual inventory system is used:
A)a physical inventory count must be taken to determine cost of goods sold.
B)inventory shrinkage is difficult to determine.
C)the cost of each item sold must be known.
D)timeliness of data is sacrificed for lower costs of operation.

Question

Quizplus · Accepted Answer

When a perpetual inventory system is used, the cost of each item sold must be known. This is because the system keeps a continuous record of inventory levels and costs, allowing for real-time tracking of inventory and cost of goods sold. This also makes it easier to determine inventory shrinkage and reduces the need for physical inventory counts to determine cost of goods sold. While there may be some additional costs associated with implementing and maintaining the system, the timeliness of data is not sacrificed.

When a Perpetual Inventory System Is Used