Asked by Betsy Jaramillo on Jun 19, 2024
Verified
Under a perpetual inventory system inventory shrinkage and lost or stolen goods are more readily determined.
Perpetual Inventory System
An accounting method where inventory records are updated continuously as transactions occur.
Inventory Shrinkage
The loss of products due to factors like theft, damage, or error, which leads to a discrepancy between recorded inventory and actual stock.
Lost Or Stolen Goods
This term refers to inventory items that are missing due to theft or misplacement and represent a loss to the business.
- Identify the difference between perpetual and periodic inventory systems.
Verified Answer
BM
Brittany MacKeiganJun 21, 2024
Final Answer :
True
Explanation :
Under a perpetual inventory system, each inventory item is tracked constantly and in real-time. This allows for a more accurate determination of inventory shrinkage (losses due to spoilage, theft, or other causes) and lost or stolen goods, as any discrepancies between the recorded inventory and the physical inventory can be quickly identified and investigated. In contrast, a periodic inventory system relies on physical inventory counts conducted at regular intervals, which may miss smaller losses or inaccuracies in tracking.
Learning Objectives
- Identify the difference between perpetual and periodic inventory systems.