Question

To ensure the accuracy of inventory accounted for using a perpetual system, physical counts ________. (check all that apply)

1) detect theft
2) are not needed when a perpetual system is used
3) detect bookkeeping errors
4) detect shrinkage

Answer 1

Physical counts in a perpetual inventory system are essential for detecting theft, bookkeeping errors, and shrinkage. They validate the accuracy of the inventory records despite the ongoing tracking that a perpetual system provides.

Step-by-step explanation:

To ensure the accuracy of inventory accounted for using a perpetual system, physical counts are necessary because they serve to:

• Detect theft,
• Detect bookkeeping errors,
• Detect shrinkage.

The notion that physical counts are not needed when a perpetual system is used is incorrect because even the most sophisticated inventory systems can be subject to discrepancies due to theft, errors, and inventory loss. Conducting regular physical counts of inventory helps business owners validate the accuracy of their perpetual inventory records and address any issues that may have arisen. It is important to integrate both inventory tracking methods to maintain accurate business records.