Accounting · Inventory Systems
Which of the following describes a primary advantage of maintaining a 'continuous inventory' (perpetual inventory) system rather than a 'periodic inventory' system?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It ensures that inventory is always valued at its net realisable value throughout the year.
- 2It provides better information for inventory control and helps avoid excessive build-up of certain lines.✓
- 3It eliminates the need for any physical inventory counts at the end of the accounting period.
- 4It is significantly cheaper to maintain and requires less administrative oversight.
Correct answer
It provides better information for inventory control and helps avoid excessive build-up of certain lines.
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