Under the perpetual inventory system, the return of goods from a customer would increase Merchandise Inventory and decrease Cost of Goods Sold.

Question

Quizplus · Accepted Answer

This is because under the perpetual inventory system, each sale and return is recorded in the inventory account, and any increase in Merchandise Inventory and decrease in Cost of Goods Sold would reflect an increase in the inventory on hand and a reduction in the cost of goods sold.

Under the Perpetual Inventory System, the Return of Goods from a Customer