Freije Refrigeration Company has an inventory of raw materials and parts consisting of thousands of different items which are of small dollar value individually but significant in total. A fundamental control requirement of Freije’s inventory system is that:

Student Answer:

Perpetual inventory records be maintained for all inventory items

The taking of physical inventories be conducted on a cycle basis rather than at year-end

The storekeeping function not be combined with the production and inventory record-keeping functions

Material requisitions be approved by an officer of the company