MANAGEMENT

Detailed explanation-1: -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-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: -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-4: -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.