The Drive n Go Motors sells used cars. Inventory is continuously updated as vehicles are purchased and sold. Additionally, each cost of each car is separately accounted for when computing the ending inventory. What type of inventory control method does Drive n Go use?

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

The Drive ‘n Go Motors sells used cars. Inventory is continuously updated as vehicles are purchased and sold. Additionally, each cost of each car is separately accounted for when computing the ending inventory. What type of inventory control method does Drive ‘n Go use?

A	Last In, Last Out
B	Specific Identification
C	First In, First Out
D	Weighted Avgerage

Explanation:

Detailed explanation-1: -The perpetual inventory system keeps track of inventory balances continuously. This is done through computerized systems using point-of-sale (POS) and enterprise asset management technology that record inventory purchases and sales.

Detailed explanation-2: -Which statement about Best Buy’s computerized inventory system is correct? It allows the company to analyze sales patterns to determine when to mark down merchandise or when to restock seasonal merchandise.

Detailed explanation-3: -Purchase Allowance. b. An amount granted to the purchaser as an incentive to keep goods that are not “as ordered."

Detailed explanation-4: -In a periodic inventory system, cost of goods sold is not recorded as each sale occurs. Merchandising sales and costs reported on the income statement usually differ form cash receipts and payments for the period. The periodic inventory system is superior to the perpetual inventory system in preventing shrinkage.

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