Final answer:
A modern perpetual inventory system achieves better control over inventory by providing real-time information on the quantity and cost of merchandise on hand. It records both the quantity and cost of inventory, but physical counts are still recommended to verify accuracy. While not required by U.S. GAAP, perpetual inventory systems are commonly used in businesses.
Step-by-step explanation:
A modern perpetual inventory system is a method of managing and tracking inventory that provides real-time information about the quantity and cost of merchandise on hand.
A. It achieves better control over inventory by updating the inventory records continuously as sales and purchases occur, ensuring accurate and up-to-date information.
B. It records both the quantity and the cost of merchandise inventory on hand, allowing businesses to calculate the value of their inventory at any given time.
C. Although a perpetual inventory system can minimize the need for physical counts of inventory, periodic physical counts are still recommended to verify the accuracy of the records.
D. While a modern perpetual inventory system is commonly used by businesses, it is not specifically required by U.S. GAAP (Generally Accepted Accounting Principles), but it is highly recommended as it improves accuracy and efficiency.