ECONOMICS

Detailed explanation-1: -Which inventory system recognizes cost of goods sold and decreases inventory each time a sale occurs? Perpetual inventory system.

Detailed explanation-2: -Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. A periodic inventory system does not require a detailed record of inventory items. The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash from credit sales.

Detailed explanation-3: -Answer: d. with each sale. In a perpetual inventory system, there is an updated and real time monitoring of ending inventory and cost of goods sold. Everytime there are inventory purchases, these are directly recorded to the inventory account.

Detailed explanation-4: -With a periodic inventory system, a company physically counts inventory at the end of each period to determine what’s on hand and the cost of goods sold.