Why this is mistaken
Periodic and perpetual describe when inventory records update. FIFO, average, and LIFO describe how cost is assigned. Either recordkeeping system still needs a supported reporting-date population. A running balance makes a difference visible; investigation determines whether it reflects a recording correction, cutoff item, ownership issue, damage, or supported loss.
Where to watch
When this mistake may appear
- Perpetual means FIFO.
- The perpetual balance makes a count unnecessary.
- Every book-to-count difference is shrinkage.
Check your work
Your work may contain this mistake if:
- Selects a cost-flow method from record timing or posts an unexplained difference without testing population and recording causes.