Question

Which statement is false? A) Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand. B) No matter whether a periodic or perpetual inventory system is used, all companies need to determine inventory quantities at the end of each accounting period. C) An inventory count is generally more accurate when goods are not being sold or received during the counting. D) Companies that use a perpetual inventory system must take a physical inventory to determine inventory on hand on the balance sheet date and to determine cost of goods sold for the accounting period.

Answer 1

Answer:

A) Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand

Explanation:

The physical inventory involves an actual physical count only.  During the physical counting, the counter employs analytical procedures to verify that the actual physical account and the records in the financial statement match. The physical count may include a review of the company's inventory procedures.

The counting process follows some accepted best practices, which include.

1. Two-person count teams
2. Pre-numbered tickets and unique sequencing
3. Halt issuing and receiving of products during the inventory count
4. Separation of customer products
5. A master count sheet that is controlled only by the manager of the inventory