Which accounts are affected in the closing process under a perpetual inventory system?
A)Gross Margin and Cost of Goods Sold
B)Cost of Goods Sold, Sales Returns and Allowances, and Sales Discounts
C)Gross Margin, Sales Returns and Allowances, and Sales Discounts
D)Operating Expenses, Sales Revenue, and Purchases

Question

Quizplus · Accepted Answer

Under a perpetual inventory system, the closing process involves transferring the balances of temporary accounts (such as Cost of Goods Sold, Sales Returns and Allowances, and Sales Discounts) to the owner's equity account to prepare the company for the next accounting period. These accounts directly affect the calculation of net income and are closed to ensure accurate financial reporting.

Which Accounts Are Affected in the Closing Process Under a Perpetual