A perpetual inventory system is preferable to a periodic system if adequately controlled and maintained because of which of the following?
A)It requires that a full inventory count be taken at year-end by all warehouse employees.
B)It allows management to calculate cost of goods sold at year-end.
C)It provides information to management where book inventory is continuously in agreement with inventory on hand within specified time periods.
D)It better controls the receipt of goods.

Question

Quizplus · Accepted Answer

A perpetual inventory system provides real-time information to management about the inventory levels and ensures that book inventory is continuously in agreement with inventory on hand. This helps in better controlling the inventory levels and managing the stock levels efficiently. It also helps in reducing the cost of periodic inventory counting at year-end. Therefore, option C is the correct choice. Options A, B, and D are incorrect as they do not explain the advantages of a perpetual inventory system but rather highlight the limitations of a periodic system.

A Perpetual Inventory System Is Preferable to a Periodic System