MANAGEMENT

Detailed explanation-1: -What Is a Perpetual Inventory System? 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-2: -The periodic inventory system uses an occasional physical count to measure the level of inventory and the cost of goods sold. The perpetual system keeps track of inventory balances continuously, with updates made automatically whenever a product is received or sold.

Detailed explanation-3: -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-4: -A perpetual inventory system automatically updates and records the inventory account every time a sale, or purchase of inventory, occurs.