On December 31,2018,you count 600 backpacks in inventory.During the next quarter,you carefully record the effect of each purchase and sale transaction on inventory.You buy 256 backpacks during the next quarter.On March 31,2019,you count 576 backpacks in inventory.Which of the following is not correct?
A)Ending inventory on March 31,2019 should be 576 backpacks.
B)Your company uses the perpetual inventory method.
C)Your company's records would show that 280 backpacks were sold during the quarter.
D)The amount of shrinkage cannot be determined with this type of inventory system.

Question

Quizplus · Accepted Answer

Units in beginning inventory + Units purchased − Units sold = Units in ending inventory
= 600 + 256 − 280 = 576
Since the effect of each purchase and sale is recorded,a perpetual inventory system is in use.Shrinkage can be determined in a perpetual inventory system by comparing recorded inventory to the physical count.

On December 31,2018,you Count 600 Backpacks in Inventory