Question

All of the following statements are true regarding the periodic inventory system except Under the periodic system, a company uses separate accounts to record freight costs, returns, and discounts. Using the periodic inventory system affects the balance sheet contents differently than when the perpetual system is used. Under the periodic inventory system, the balance of cost of goods sold is calculated at the end of the period. Under the periodic inventory system, the balance in ending inventory is calculated at the end of the period.

Answer 1

Answer:

Using the periodic inventory system affects the balance sheet contents differently than when the perpetual system is used

Explanation:

Periodic inventory system can be regarded as a method used in inventory valuation for the purpose of

financial reporting whereby physical count of the inventory is carried out at specific intervals. There is no effort made in keeping up-to-date records patterning the cost of goods sold as well as inventory under this system. It should be noted that these followings as regards to periodic inventory system

✓ Under the periodic system, a company uses separate accounts to record freight costs, returns, and discounts.

✓Under the periodic inventory system, the balance of cost of goods sold is calculated at the end of the period. ✓Under the periodic inventory system, the balance in ending inventory is calculated at the end of the period.