Periodic Inventory System is an inventory system which relies upon physical count of the inventory to determine the ending inventory balance and cost of goods sold. In other words, no effort is made to keep up-todate records of either the inventory or cost of goods sold, physical count of inventory is made at specific intervals. The periodic inventory system requires businesses to obtain a physical count of inventory to determine quantities on hand. The system is normally used for relatively inexpensive goods, such as in a small, local store without optical-scanning cash registers that does not keep a running record of every loaf of bread and every key chain that it sells. The correct answer is A.