Which of the following statements is correct?
A) Under a periodic system, the inventory account is only updated once per period.
B) Under a perpetual system, the inventory account is only updated once per period.
C) Cost of goods sold computed under a periodic system would be higher than under a perpetual system.
D) The value of inventory computed under a periodic system would be lower than under a perpetual system.

Question

Quizplus · Accepted Answer

Under a periodic inventory system, the inventory account is updated at the end of the accounting period, not after each sale or purchase. This contrasts with a perpetual system, where inventory and cost of goods sold are updated continuously with each transaction. Choices B, C, and D are incorrect because they either misrepresent the nature of inventory systems or make inaccurate comparisons between periodic and perpetual systems.

Which of the Following Statements Is Correct