Asked by Fatima Santos on Jun 03, 2024
Verified
Under a perpetual inventory system the cost of goods sold is determined each time a sale occurs.
Perpetual Inventory
An inventory management system where records are continuously updated to reflect sales, purchases, and stock levels in real-time.
Cost Of Goods Sold
The direct costs attributable to the production of goods sold by a company, including materials and labor.
Sale Occurs
The event in which goods or services are transferred from a seller to a buyer for monetary consideration.
- Understand the perpetual and periodic inventory systems and their impact on accounting records.
Verified Answer
NV
Nitya VangalaJun 03, 2024
Final Answer :
True
Explanation :
In a perpetual inventory system, the cost of goods sold is updated continuously as soon as a sale occurs through the use of computer software or other inventory tracking methods. This allows for real-time tracking of inventory levels and costs, as well as accurate determination of the cost of goods sold with each sale.
Learning Objectives
- Understand the perpetual and periodic inventory systems and their impact on accounting records.
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