Using the periodic system of inventory:
A) gives the same results as a perpetual system when FIFO is applied but without some of the extra detail.
B) is much more cost-effective as a perpetual system requires a computer.
C) does not require a stock take each year and is therefore more accurate.
D) accurately reports all stock movements which assists with decision making.

Question

Quizplus · Accepted Answer

The periodic system of inventory may provide similar results as a perpetual system when FIFO (first in, first out) method is employed. However, it does not offer the same level of detail that a perpetual system provides. Moreover, A, B, and D are incorrect because:

- B is untrue as both systems can be operated manually, and it is not essential to have a computer.
- C is incorrect as a stock take is usually needed at the end of the accounting period to determine the ending inventory, and it can be costly.
- D is incorrect as periodic inventory system does not provide real-time reporting and is not useful for making immediate decisions.

Using the Periodic System of Inventory