Final answer:
The system under which inventory and COGS are updated only when physical inventory counts are made is known as the Periodic Inventory System.
Step-by-step explanation:
The system under which inventory and COGS (Cost of Goods Sold) are updated only when physical inventory counts are made is known as the Periodic Inventory System.
In the Periodic Inventory System, the inventory records are not updated in real-time. Instead, the inventory and COGS values are calculated periodically, usually at the end of a specific accounting period such as a month or a year, based on the physical inventory count.
For example, if a company using the periodic inventory system takes a physical inventory count at the end of the year and determines that they have 1,000 units of a particular product in inventory, then the inventory value and the cost of goods sold will be updated accordingly based on the value of those 1,000 units.