Identify whether each description best applies to a periodic or a perpetual inventory system.
a. Provides more timely information to managers.
b. Requires an adjusting entry to record inventory shrinkage.
c. Markedly increased in frequency and popularity in business within the past decade.
d. Records cost of goods sold each time a sales transaction occurs.


I found it odd, but I believe these are all characteristics of perpetual inventory system. Am I right? Thanks for the help!

The new inventory system i.e. perpetual inventory system will help the business in following areas.

• Management/decision makers can have up-to-date position of stocks for making decisions like accepting a sales contract, purchase of material and day to day production decisions.
• Perpetual inventory system keeps a running, continuous record that tracks inventories and the cost of goods sold on a day-to-day basis.
• A perpetual inventory system helps managers control inventory levels and prepare interim financial statements.
• Under the perpetual system, inventory amounts are updated each time and inventory transaction is processed.
• In perpetual system, shrinkage is simply the difference between the cost of inventory identified by a physical count and the clerical inventory balance.


I think this would also help you.

A Perpetual
B Periodic
C Perpetual
D Perpetual

You did notice this thread was from may 2007 and its now march 2011?