MANAGEMENT

Detailed explanation-1: -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-2: -Answer and Explanation: If a company determines the cost of goods sold each time a sale occurs, it d) uses a perpetual inventory system. Perpetual inventory systems determine the cost of goods sold with each sale usually using a computer system that tracks purchases and adjusts inventory values.

Detailed explanation-3: -Question: In a perpetual inventory system, cost of goods sold is determined at the time of each sale. Figures retained in a subsidiary ledger provide the cost of the specific item being surrendered so that an immediate reclassification from asset to expense can be made.

Detailed explanation-4: -When a sale occurs under perpetual inventory systems, two entries are required: one to recognize the sale, and the other to recognize the cost of sale. For the cost of sale, Merchandise Inventory and Cost of Goods Sold are updated.