Question

When using the perpetual inventory system, all inventory

transactions are recorded to the inventory account so to maintain
an up-to-date balance. Group of answer choices
a) true
b) false

Answer 1

In the perpetual inventory system, all transactions are recorded to the inventory account to maintain an up-to-date balance.

Step-by-step explanation:

When using the perpetual inventory system, all inventory transactions are recorded to the inventory account to maintain an up-to-date balance.

In the perpetual inventory system, every time inventory is bought or sold, the inventory account is updated immediately. This allows for a real-time view of the inventory balance. It eliminates the need for a physical count of inventory at the end of each accounting period.

For example, if a company purchases inventory for $1,000, the perpetual inventory system would record a debit of $1,000 to the inventory account, increasing the balance.