Question

When identical units of an item are purchased at different costs,

a. an inventory cost flow method must be used under a perpetual inventory system only.
b. an inventory cost flow method must be used under both a perpetual and a periodic inventory system.
c. an inventory cost flow method is not used under either a perpetual or a periodic inventory system.
d. an inventory cost flow method must be used under a periodic inventory system only?

Answer 1

When identical units of an item are purchased at different costs: an inventory cost flow method must be used under both a perpetual and a periodic inventory system.

A perpetual inventory system will update your inventory on hand after each sale or purchase of inventory is made. A periodic inventory system is updated periodically, meaning, a company will give a time period they would like their sales and purchases to update in and the system will perform that. Both systems are great for a business but it's their option of how they are generated.