Question

Under the perpetual system of inventory, the cost of merchandise sold is only calculated periodically when...

Under the perpetual system of inventory, the cost of merchandise sold is only calculated periodically when a physical count of inventory is done.

True

False

Which type of control is designed to discover any problems or fraud after it arises?

Detective

Segregation of Duties

Risk Assessment

Just-in-Case inventory seeks to create a buffer in inventory against unforeseen shipping delays and unforeseen demand by customers.

True

False

Preventive

Business   Accounting   
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Homework Answers

Answer #1

False

Explanation:

perpetual inventory system keep track of inventory balances continuously. Purchases and sales are immediately recorded in inventory account. Cost of Goods sold is also updated continuously as each sale is made.

Detective

Explanation:

Detective controls seeks to uncover problems in company's process once they have occurred. Examples are Physical counting of inventory etc.,

False

Explanation:

Under JIT system, the company must operate with continuously low inventory levels to keep the cost to the lowest. Under JIT system the company should not hold any buffer inventory.

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