Which of the following statements is true about perpetual book inventory?

The statement regarding perpetual book inventory being able to determine both merchandise on hand and merchandise sold is accurate because a perpetual inventory system continuously updates inventory records whenever a sale occurs or when merchandise is added to stock. This system allows for real-time tracking, which provides a clear picture of how much inventory is available at any given moment and how much has been sold.

This capability is particularly valuable in a retail environment, where knowing both the current stock levels and sales data helps in making informed purchasing and operational decisions. The integration of these data points also facilitates inventory management, aiding in preventing stockouts or overstock situations, thus optimizing inventory levels and enhancing customer service.

In contrast, the other statements do not fully capture the functionalities or limitations of perpetual inventory. For example, perpetual inventory does not eliminate the need for physical counts, as discrepancies can still occur due to theft, damage, or recording errors. Therefore, occasional physical inventory assessments are essential to validate the records. The notion that it only tracks merchandise sold is inaccurate, as perpetual inventory tracks both incoming and outgoing inventory items. Lastly, while it aims to provide accurate results, discrepancies can arise due to various factors, meaning it does not guarantee absolute accuracy in daily results without the potential for checks and reconciliations