Question

Which of the following is true of the periodic inventory method but not the

perpetual method?
A. A physical inventory count is only done to address an error.
B. The Inventory account is adjusted at the end of the accounting
period.
C. The Inventory account balance changes constantly due to debits
and credits.
D. The Inventory account is credited for the cost of the items sold.

Answer 1

The correct answer is B. The Inventory account is adjusted at the end of the accounting period in the periodic inventory method. This contrast with the perpetual inventory method, where inventory and cost of goods sold accounts are updated continuously.

Step-by-step explanation:

The true statement about the periodic inventory method that is not true for the perpetual inventory method is B. The Inventory account is adjusted at the end of the accounting period. In the periodic system, the cost of goods sold is calculated at the end of the period by taking a physical inventory count to determine the ending inventory and thus the cost of goods sold for the period. The inventory account does not change with each sale or purchase during the period. In contrast, under the perpetual inventory system, the inventory account is updated continuously with each transaction affecting inventory, and the cost of goods sold is recorded at the point of each sale.