Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 8 - Valuation of Inventories: A Cost-Basis Approach - Review and Practice - Questions - Page 421: 3


When we speak of a perpetual inventory system, data is available at any time on the quantity and dollar amount of each merchandise or item of material on hand. On the other hand, a physical inventory means that inventory is periodically counted, at least once a year, but up-to-date records are not necessarily maintained.

Work Step by Step

In physical inventory, discrepancies often occur between the physical count and the perpetual records because of misplacement, clerical errors, waste, theft, etc.
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