The right response to the above sentence is (A), hence both statements are false.
An organization or entrepreneurial entity engaging in economic, industrial, or business life is referred to as a business. Enterprises can just be for-profit corporations or charitable institutions. Limited liability firms, sole proprietor, corporations, and partnerships are among the several forms of businesses.
Statement I: Item purchases are recorded in the purchase account via the periodic inventory system, which changes the inventory holding account balance only following a regular health inventory count. As a result, the stock is not updated following each sale or purchase of commodities.
Because the periodic inventory technique determines the quantity of inventory only after the practical inventory count, the claim that the firm know the levels of stock before the next practical inventory is performed is untrue.
II. After each purchase and sale of commodities, the permanent system of inventories constantly updates the inventory account.
As a result, it is erroneous to say that perhaps the perpetual inventories system permits periodic inventory updates because it continuously adjusts the inventory cost and always offers the most recent quantity of inventory.
As a result, the two assertions provided in the issue are untrue.
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The complete question is-
Statement I:
In the case of a periodic inventory system, the business knows the amount of the inventory before the next physical inventory is taken.
Statement II:
A perpetual inventory system allows for a periodic update of records on inventory.
Both statements are incorrect
Both statements are correct
Statement 1 is incorrect; statement 2 is correct
Statement 1 is correct; statement 2 is incorrect
