Which of the Following Transactions Will Cause a Liability to Be

question 81

Multiple Choice

Which of the following transactions will cause a liability to be credited and a cost account to be debited when the periodic inventory system is in use?

• A)Recorded the adjustment for depreciation
• B)Recorded the adjustment for the consumption of supplies
• C)Purchased merchandise inventory on account
• D)Purchased office supplies on account

---

Definitions:

Tax Rate

Tax rate is the percentage at which an individual or corporation is taxed by the government on their income, assets, or transactions.

Financial Leverage

The strategy of using loans to increase the prospective benefits of an investment.

Debt/Equity Ratio

A gauge for comparing the mix of a company's funding through shareholders' equity versus debt, frequently applied to understand the company's use of financial leverage.

Retained Earnings

Retained earnings represent the portion of net income left after dividends have been paid to shareholders, which is then reinvested in the business.