CMA Intermediate · Cost Accounting · Material Costs
Under the perpetual inventory system, what is meant by continuous stock verification?
Continuous stock verification means counting a few items regularly throughout the year on a planned programme, so that every item is checked at least once and valuable items more often. It avoids stopping production, unlike a single year-end physical count.
- ACounting all stores items once at the end of the financial year
- BCounting a few items on a regular basis throughout the year so that every item is checked several timesCorrect
- CCounting only the items with the highest value once a year
- DCounting stock only when the auditor requests it
Explanation
Continuous stock verification is the routine checking of selected items throughout the year, so that all items are counted at least once, and important ones more often, without stopping operations. A year-end count is periodic verification. Counting only on demand is not a system at all.
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