This inventory system requires a physical inventory count to be made at least once during the year. Answer 1 This inventory system computes and records cost of goods sold at the time of sale. Answer 2 This inventory system computes and records cost of goods sold only at the end of the period. Answer 3 This inventory system computes and records sales revenue at the time of sale.

Question

Stanley

Business

26 July, 05:43

This inventory system requires a physical inventory count to be made at least once during the year. Answer 1 This inventory system computes and records cost of goods sold at the time of sale. Answer 2 This inventory system computes and records cost of goods sold only at the end of the period. Answer 3 This inventory system computes and records sales revenue at the time of sale.

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Answers (1)

Know the Answer?

Peter Huff · Answer 1

Answer 2 : This inventory system computes and records costs of goods sold at the end of the period.

Explanation:

The time at which records of costs of goods sold is done determines a company's inventory system.

Two inventory systems exist which companies can use in their business which are Periodic and Perpetual inventory systems.

Periodic Inventory System

In this system recording of cost of goods sold is done at the end of a certain period. It could be after a week, month or year. This is the type is system that is being explained in the question.

Perpetual

The other is the other system of recording cost of goods sold. In this system cost of goods sold is computed at end of each sale (at the time of sale)

Hence it is important to note when the count of inventory is done. If at the end of a period then its Periodic and when count is done after every sale then that is Perpetual.