Under a perpetual inventory system, purchase of inventory is recorded as a debit to the
A)Supplies account.
B)Purchases account.
C)Merchandise Inventory account.
D)Cost of Goods Sold account.

Question

Quizplus · Accepted Answer

Under perpetual inventory system, purchase of inventory is directly recorded as an increase in the Merchandise Inventory account. This system keeps a continuous record of the inventory levels and cost of goods sold, hence the name "perpetual". Options A, B, and D are not appropriate as they do not reflect the direct impact on the Merchandise Inventory.

Under a Perpetual Inventory System, Purchase of Inventory Is Recorded