MANAGEMENT

Detailed explanation-1: -Answer and Explanation: The statement is TRUE. In the perpetual inventory system, inventory purchases are recorded in the inventory asset balance sheet account, and the income statement expense (Cost of Goods Sold) is only recorded as and when goods are sold.

Detailed explanation-2: -A perpetual inventory system is a program that continuously estimates your inventory based on your electronic records, not a physical inventory. This system starts with the baseline from a physical count and updates based on purchases made in and shipments made out.

Detailed explanation-3: -Explanation: In a perpetual inventory system the inventory account is updated continuously for purchases and sales. When a purchase is made the inventory account is debited and increased.

Detailed explanation-4: -Which of the following is not true of the perpetual inventory method? Purchase returns are recorded by debiting Accounts Payable and crediting Purchase Returns and Allowances.