Inventory Recording Systems: Perpetual vs Periodic

The video tutorial discusses two inventory systems: perpetual and periodic. The perpetual system updates accounting records continuously, suitable for businesses with high-value, low-turnover goods like car dealerships. In contrast, the periodic system updates records at the end of a period, ideal for high-volume retailers. The choice of system often depends on the business type and industry.

What determines the choice of inventory system for a company?

• The company's preference

• The type of industry and business

• The number of employees

• The location of the company

Which type of business is most likely to use a perpetual inventory system?

• A fast-food restaurant

• A clothing retailer

• A car dealership

• A grocery store

Why might a business with high sales volume avoid using a perpetual inventory system?

• It requires too many journal entries

• It is too slow

• It is too expensive

• It is not accurate

How often does a periodic inventory system update records?

• At the end of a period

• Continuously

• At the end of each transaction

• Every hour

Which type of business is best suited for a periodic inventory system?

• A small boutique

• A luxury car dealership

• A large retail store

• A local bakery