Perpetual inventory differs from physical inventory in that ______.

Perpetual inventory differs from physical inventory in that ______.

• A. No visual inspection of the inventory is done to calculate the perpetual inventory
• B. Visual inspection is required for perpetual inventory
• C. It requires counting once a year
• D. It uses only manual records

Answer: (A)

Perpetual inventory is a continuously updated record of stock that reflects every purchase and every sale. Because the system updates with each transaction, you know the on-hand quantity at any moment without doing a full physical count. Visual inspection isn’t required to calculate the perpetual balance; a physical count is only used periodically to verify accuracy and correct for discrepancies. The other statements misstate how perpetual inventory works: it doesn’t require a yearly count, and it isn’t limited to manual records—it can be computerized and automated.

Perpetual inventory is a continuously updated record of stock that reflects every purchase and every sale. Because the system updates with each transaction, you know the on-hand quantity at any moment without doing a full physical count. Visual inspection isn’t required to calculate the perpetual balance; a physical count is only used periodically to verify accuracy and correct for discrepancies. The other statements misstate how perpetual inventory works: it doesn’t require a yearly count, and it isn’t limited to manual records—it can be computerized and automated.