1. A company has decided that because it employs a perpetual system, a physical count of inventory at the end of the year is not needed. Which of the following choices most likely identifies a flaw with this decision?

1. A physical count is needed because there is no record of units sold during the year.
2. A physical count is needed to understand whether inventory costs have increased or decreased during the year.
3. A physical count is needed because theft, breakage, and spoilage during the year likely have not been captured in a perpetual system.
4. A physical count is needed to understand whether the selling prices of inventory have increased or decreased during the year.