Question

Badger Enterprises purchased aluminum from JG Metals. When Badger Enterprises recorded this transaction, they made entries into three accounts: Purchases, Freight Costs, and Purchase Discounts. Based on this, what type of inventory system does Badger Enterprises use?

Answer 1

ANSWER: Perpetual Inventory System

EXPLANATION: Badger Enterprises use Perpetual Inventory System to record their accounts. Perpetual Inventory System is a technique or system of recording accounting by a company where the inventory is maintained constantly as and when it changes. All the transactions of the inventory are maintained anytime it increases or decreases. Usually, companies have computerized system including bar-coding of individual items in the inventory.

Answer 2

Perpetual inventory system - is the type of inventory system Badger Enterprise uses. A perpetual inventory system is when companies keep track of each individual purchase and sale of inventory continuously. If they use a periodic inventory system, they will do it periodically, or over a given point in time.