Answer:
D. It requires that each item of stock is counted and recorded to determine stock levels
Explanation:
A perpetual system of inventory can be defined as a method of financial accounting, which involves the updating informations about an inventory on a continuous basis (in real-time) as the sales or purchases are being made by the customers, through the use of enterprise management software applications and a digitized point-of-sale (POS) equipment.
Under a perpetual system of inventory, updates of the journal entry for cost of goods sold or received would include debiting accounts receivable and crediting sales immediately as it is being made or happening.
Hence, an advantage of the perpetual system of inventory over the periodic system of inventory is that, it ensures the inventory account balance is always accurate provided there are no spoilage, theft etc.
The following are the characteristic of a perpetual inventory system;
I. It is the most popular choice for modern business.
II. Inventory is updated in near real-time.
III. It provides up-to-date balance information and requires fewer physical counts.
