One difference between periodic and perpetual inventory systems is that cost of goods sold is:

• A. only recorded at the end of the period in both systems
• B. never recorded in the perpetual system
• C. calculated using the same method and timing in both systems
• D. continuously updated in the perpetual system but determined at period end in the periodic system

Answer: (D)

Verified step by step guidance

1. Understand the key difference between periodic and perpetual inventory systems: The periodic system updates inventory and cost of goods sold (COGS) at the end of the accounting period, while the perpetual system continuously updates inventory and COGS after each transaction.
2. In the periodic inventory system, purchases are recorded in a temporary account (e.g., Purchases) during the period, and the COGS is calculated at the end of the period using the formula: \( \text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory} \).
3. In the perpetual inventory system, inventory and COGS are updated in real-time after each sale. The system automatically adjusts inventory levels and calculates COGS based on the cost of the items sold.
4. Recognize that the timing of recording COGS is the primary distinction: In the periodic system, COGS is determined at the end of the period, while in the perpetual system, COGS is continuously updated.
5. Apply this understanding to the problem: The correct answer is that COGS is continuously updated in the perpetual system but determined at period end in the periodic system.