Which inventory system updates COGS and Inventory continually?

• A. Periodic reports only at period end
• B. Hybrid system updates at mid-period
• C. Perpetual updates COGS and Inventory continually
• D. Manual tracking required

Answer: (C)

A perpetual inventory system updates COGS and Inventory continually. In this setup, every sale immediately records a reduction in Inventory and the corresponding Cost of Goods Sold, while every purchase increases Inventory. This keeps both the on-hand quantities and the COGS up to date in real time, so you can see current stock levels and the latest COGS after each transaction.

Period-end reporting describes a periodic system, which only updates these accounts at the end of a period after a physical count. The idea of mid-period updates or manual tracking implies either non-continuous updates or no automatic recording, which does not meet the definition of continual updating.