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

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

Answer: (A)

Verified step by step guidance

1. Understand the key characteristics of each inventory system mentioned in the problem: Perpetual inventory system, Just-in-time inventory system, Specific identification method, and Periodic inventory system.
2. Learn that the perpetual inventory system updates inventory and cost of goods sold accounts continuously after each purchase or sale. This system provides real-time tracking of inventory levels and transactions.
3. Contrast the perpetual inventory system with the periodic inventory system, which updates inventory and cost of goods sold accounts only at the end of an accounting period, not continuously.
4. Recognize that the Just-in-time inventory system is a strategy focused on minimizing inventory levels by receiving goods only as they are needed for production or sales, rather than providing continuous updates to inventory records.
5. Understand that the specific identification method is a way to track inventory costs by assigning the exact cost of each item sold or remaining in inventory, but it does not inherently provide continuous updates to inventory and cost of goods sold accounts.