alleryPeriodic system cannot detect:
AFinal closing stock value
BDirect labour expense paid
CTotal purchases for period
DPilferage and shrinkage loss
Answer & Solution
Correct answer: D. Pilferage and shrinkage loss
1. In periodic system COGS is the residual.
2. Any pilferage, damage or fraud reduces the physical count and inflates the calculated COGS.
3. There is no separate visibility of losses since they merge into COGS.
_Source: ICAI BoS Foundation Paper 1, Ch 4 "Inventories", §4.1 limitations (iii)_
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