Under a periodic inventory system
A) accounting records continuously disclose the amount of inventory
B) a separate account for each type of merchandise is maintained in a subsidiary ledger
C) a physical inventory is taken at the end of the period
D) Merchandise Inventory is debited when goods are returned to vendors

Question

Quizplus · Accepted Answer

Under a periodic inventory system, a physical inventory is taken at the end of the period to determine the quantity of inventory on hand. This is necessary because accounting records do not continuously disclose the amount of inventory, and there is no separate account for each type of merchandise in a subsidiary ledger. Merchandise Inventory is debited when goods are purchased, not when they are returned to vendors.

Under a Periodic Inventory System