When merchandise is sold and the perpetual system of inventory is used, the journal entry to record a sale of merchandise on account would include:
A)debiting Accounts Receivable and crediting Sales.
B)debiting Accounts Receivable and crediting Inventory.
C)debiting Accounts Receivable and crediting Cost of Goods Sold.
D)debiting Cost of Goods Sold and crediting Accounts Receivable.

Question

Quizplus · Accepted Answer

When merchandise is sold and the perpetual inventory system is used, the journal entry to record the sale on account involves increasing the amount owed by the customer by debiting Accounts Receivable. At the same time, revenue is recognized and credited to Sales. Therefore, the correct journal entry for a sale of merchandise on account is to debit Accounts Receivable and credit Sales.

When Merchandise Is Sold and the Perpetual System of Inventory