If Larry was using a perpetual inventory system, how would he record the purchase of $20,000 of inventory on account?
A)A credit to sales
B)A debit to sales
C)A debit to merchandise inventory
D)A credit to merchandise inventory
E)A credit to purchases on account

Question

Quizplus · Accepted Answer

The purchase of inventory on account would be recorded as a debit to merchandise inventory.
Key Takeaway: With a perpetual inventory system, the inventory account is updated after every purchase or sale and quantities are updated continuously. A purchase would be an addition to the merchandise inventory and this account is increased with a debit entry.

If Larry Was Using a Perpetual Inventory System, How Would