Under a perpetual inventory system

a. the account purchase returns and allowances is credited

b. when goods are returned to vendors.

c. increases in inventory resulting from purchases are debited to purchases.

d. there is no need for a year-end physical count.

e. accounting records continuously disclose the amount of inventory.

Question

Business

Dominique Kirby

25 April, 09:07

Under a perpetual inventory system

a. the account purchase returns and allowances is credited

b. when goods are returned to vendors.

c. increases in inventory resulting from purchases are debited to purchases.

d. there is no need for a year-end physical count.

e. accounting records continuously disclose the amount of inventory.

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Answers (1)

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Jolly · Answer 1

e. accounting records continuously disclose the amount of inventory.

Explanation:

Under the perpetual system the record of inventory is the fairest as it records all the transactions, whether of sale, purchase, or acquisition or application of inventory, all are recorded as and when it takes place.

This shows as and when the inventory is used and sold, unlike any other system where the transactions are not recorded on monthly basis, generally.