A firm uses the periodic inventory method.Which of the following entries would be made to record a purchase of inventory on credit?
A)The accounting entry would be a debit to Accounts payable,a credit to Inventory and a credit to GST clearing.
B)The accounting entry would be a debit to Inventory,a debit to GST clearing and a credit to Accounts payable.
C)The accounting entry would be a debit to Accounts payable,a credit to Purchases and a credit to GST clearing.
D)The accounting entry would be a debit to Purchases,a debit to GST clearing and a credit to Accounts payable.

Question

Quizplus · Accepted Answer

In the periodic inventory system, purchases are recorded in a temporary account called "Purchases" rather than directly in the "Inventory" account. Therefore, the correct entry for a purchase on credit would be a debit to Purchases, a debit to GST clearing (if applicable), and a credit to Accounts Payable.

A Firm Uses the Periodic Inventory Method