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

Question

Darryl Chan

Business

4 December, 10:42

When a periodic inventory system is used, a. only the cost of merchandise sold is recorded each time a sale is made. b. only revenue is recorded each time a sale is made. c. only the reduction of inventory 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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Jadyn Ramsey · Answer 1

b. only revenue is recorded each time a sale is made

Explanation:

Under periodic inventory we adjust for COGS at the end of each month,

We don't recognize Cost of Goods Sold at the moment of sale.

When a sale occurs we recognize the revenue associate with the sale only.

It is under perpetual system when he adjustment on inventory and COGS are done simultaneously with the sale.