Question

Under the perpetual inventory system the Merchandise inventory account is continuously updated as purchases, sales, and relurns occur and under periodic inventory system the Merchandise inventory account slays as its beginning balance unti the physical inventory is recorded at the and of the accounting period. True False Under the perpetual inventory systerm, in addition to making the entry to record a sala, a company wouid: A. Debit Marchandise Inventory and credit Cost of Goods Sold B. Debit Cost of Goods Sold and credit Purchases C. Debit Cost of Goods Sold and credit Merchandise Inventory D, Make no additional entry until the end of the period A company offlers a sales discount of 5 percent if the invoice is paid within 10 days or the full amount can be paid 30 days from the invoice date. This sales discount would be labeled A, nao, 5/10 B. 5/10, n/30 C. n30, 10/5 D. 10/5, n/30 (10) Under the perpetual inventory system, which account is used to record purchases of merchandise? A. Cost of goods sold B. Purchases C. Merchandise inventory D. Accounts Payable

Answer 1

Answer to Question No. 7

True.

In Perpetual Inventory system, the Inventory is changed on each transaction of purchase, sale or purchase return etc. Whereas, in periodic Inventory system, the merchandise inventory is updated at the end of accounting period when physical inventory is taking up and all transaction are recorded at the end.

Answer to Question No. 8

At the time of sale, a company would record the sale with additional entry to record cost of goods sale.

Debit Cost of Goods Sold and Credit Merchandise Inventory

Answer to Question No. 9

Sales discount will be labelled as 5/10, n/30, where 5 represent discount rate, 10 represent discount period and 30 represent credit period.

Answer to Question No. 10

Under perpetual inventory system, merchandise inventory is used to record purchases of merchandise.