When a periodic inventory system is used, a. only revenue is recorded each time a sale is made. b. only the reduction of inventory is recorded each time a sale is made. c. only the cost of goods sold is recorded each time a sale is made. d. None of these choices are correct.

Question

Business

Roy Weber

20 July, 20:06

When a periodic inventory system is used, a. only revenue is recorded each time a sale is made. b. only the reduction of inventory is recorded each time a sale is made. c. only the cost of goods sold is recorded each time a sale is made. d. None of these choices are correct.

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Answers (1)

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Jaiden · Answer 1

Answer is option a.

Explanation:

A periodic inventory system is used to measure the level of inventory and the cost of goods sold.

The reduction of inventory is recorded on both the Periodic and Perpetual Inventory System each time a sale is made. Also, the cost of goods sold is only recorded each time a sale is made in a Perpetual Inventory System.

Without the knowledge of available inventory as well as the inventory that is being sold, it is not possible to calculate the cost of goods sold. Also as these calculations are done manually, therefore, the periodic inventory is calculated either quarterly, half-yearly or annually, and not each time the sale is made. Hence, the correct option is option a.