Under periodic inventory system,
closing stock is valued
A By actually counting the stock on a
particular date
O B From the stores ledger
O
C By deducting value of sales from
value of purchases
O D On estimate basis
Answers
Answer:
An inventory recording system has to deal with the recording of physical quantities of stock and its valuation. Now there are two principal systems for determining the inventory of a firm – the perpetual inventory system and the periodic inventory system. Let us learn about them both.
The actual counting of stock on a particular date is done under a periodic inventory system.
It is a system in which inventory is updated periodically. It updates only closing stock. Under this system, the company does not know about the level of inventory until the physical count is done. It is used where inventory and COGS are not updated properly. It is ideal for small inventory whereas large firms resort to a perpetual system. A periodic system is used by startups and firms with less inventory.