Which inventory system provides a continuous record of inventory and cost of goods sold, updating these accounts after each purchase or sale?

• A. Periodic inventory system
• B. Specific identification method
• C. Just-in-time inventory system
• D. Perpetual inventory system

Answer: (D)

Verified step by step guidance

1. Understand the concept of inventory systems: Inventory systems are methods used by businesses to track and manage their inventory levels and the cost of goods sold (COGS). The two primary systems are the periodic inventory system and the perpetual inventory system.
2. Learn about the periodic inventory system: This system updates inventory and COGS only at the end of an accounting period. It does not provide real-time updates after each transaction.
3. Understand the perpetual inventory system: This system continuously updates inventory and COGS after each purchase or sale. It uses technology, such as barcode scanners and inventory management software, to maintain real-time records.
4. Compare the perpetual inventory system with other methods: The specific identification method tracks individual items, but it is not a system for continuous updates. Just-in-time inventory focuses on minimizing inventory levels but does not inherently provide continuous updates.
5. Conclude that the perpetual inventory system is the correct answer: It is the only system that provides a continuous record of inventory and COGS, updating these accounts after each transaction.