MANAGEMENT

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. It is far more sophisticated than the periodic system of inventory management.

Detailed explanation-2: -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-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: -FIFO, LIFO, Perpetual, Periodic Under FIFO, it is assumed that items purchased first are sold first. Under LIFO, it is assumed that items purchased last are sold first. Perpetual inventory system updates inventory accounts after each purchase or sale.

Detailed explanation-5: -A perpetual inventory system inventory updates purchase and sales records constantly, particularly impacting Merchandise Inventory and Cost of Goods Sold. A periodic inventory system only records updates to inventory and costs of sales at scheduled times throughout the year, not constantly.