Graham Company is trying to select an inventory system. Below are several statements that pertain to inventory systems.
1. Cost of goods sold is only determined at the end of the period after a physical count of inventory.
2. A physical count of inventory is performed.
3. Purchases of inventory arc recorded in a purchases account.
4. Cost of goods sold is determined continually during the period as sales are made.
5. Greater control over inventory is possible.
6. This inventory system is relatively inexpensive to operate.
Required:
Select the inventory system, perpetual or periodic, that is best represented by each statement. If the statement applies to both systems, select “both.”