Companies that use a perpetual inventory system under the gross method debit the total purchase invoice amount and credit cash discounts taken to the Merchandise Inventory account.

Question

Quizplus · Accepted Answer

In a perpetual inventory system using the gross method, the total purchase invoice amount is debited to the Merchandise Inventory account, and any cash discounts taken are credited to the Accounts Payable account. This helps to track inventory levels and costs more accurately.

Companies That Use a Perpetual Inventory System Under the Gross