In a perpetual inventory system,two entries are normally made to record each sales transaction.The purpose of these entries is best described as follows:
A)One entry recognizes the sales revenue and the other recognizes the cost of goods sold.
B)One entry records the purchase of merchandise and the other records the sale.
C)One entry records the cost of goods sold and the other reduces the balance in the Inventory account.
D)One entry updates the subsidiary ledger and the other updates the general ledger.

Question

Quizplus · Accepted Answer

CIn a perpetual inventory system, each sales transaction typically requires two journal entries. The first entry (A) recognizes the sales revenue by debiting Accounts Receivable (or Cash) and crediting Sales Revenue. The second entry (C) recognizes the cost of goods sold (COGS) by debiting the COGS account and crediting the Inventory account, thereby reducing the balance in the Inventory account to reflect the outflow of goods.

In a Perpetual Inventory System,two Entries Are Normally Made to Record