When Merchandise Is Sold and the Perpetual System of Inventory

question 21

Multiple Choice

When merchandise is sold and the perpetual system of inventory is used, the journal entry for a sale would include

• A) debiting Accounts Receivable and crediting Sales.
• B) debiting Accounts Receivable and crediting Merchandise Inventory.
• C) debiting Accounts Receivable and crediting Cost of Goods Sold.
• D) debiting Cost of Goods Sold and crediting Sales.

---

Definitions:

Buy Stocks

The action of purchasing shares in a company, thereby gaining a portion of ownership in that company.

EMH

The Efficient Market Hypothesis, a theory that all known information is already reflected in asset prices, implying that it is impossible to consistently achieve higher returns than the overall market.

Semistrong Form

A form of the Efficient Market Hypothesis suggesting that all publicly available information is already reflected in stock prices, making it difficult to achieve superior gains through analysis.

Trading Volume

The total number of securities traded during a given period of time.