Question

In a periodic inventory system, cost of goods sold is not recorded as each sale occurs. Group startsTrue or False

Answer 1

In a periodic inventory system, the cost of goods sold is not recorded as each sale that occurs is a true statement.

Periodic Inventory System

• A physical count of the inventory is conducted at predetermined intervals as part of the periodic inventory system, a technique of inventory valuation for financial reporting reasons.
• In order to calculate the cost of goods sold, this accounting method starts with an inventory at the beginning of the period, adds fresh inventory purchases throughout the period, and subtracts ending inventory.
• A corporation using the periodic inventory system won't be aware of its unit inventory levels or COGS until the physical count process is finished.
• For a company with a small number of SKUs operating in a sluggish market, this method might be suitable, but for all other companies, the perpetual inventory system is preferred.  

Hence, the given statement is true.

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