Question

Under a periodic inventory system a. a separate account for each type of merchandise is maintained...

Under a periodic inventory system

a. a separate account for each type of merchandise is maintained in a subsidiary ledger

b. Merchandise Inventory is debited when goods are returned to vendors

c. accounting records continuously disclose the amount of inventory

d. a physical inventory is taken at the end of the period

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Answer #1

Answer : option ( D )

A physical inventory is taken at the end of the period .

For ex : if a company uses a periodic inventory using FIFO method.

The following had occurred .

200 units @ 9

250 unis @ 8

300 units @ 7

Ending inventory = 450 units

FIFO

Particulars Units Cost per Unit Total Cost

Beginning Inventory 200 9.0 1,800

Purchase 250 8 2,000

Purchase 300 7.00 2,100

Cost of Goods Available for Sale 750 5,900

Less: Ending Inventory (300*7+150*8) 450 3,300

Cost of Goods Sold 300 2,600

Here in the above example , the physical inventory at the end of the period is only taken.

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