Under a Perpetual Inventory System Acquisition of Merchandise for Resale

question 110

Multiple Choice

Under a perpetual inventory system acquisition of merchandise for resale is debited to the

• A) Inventory account.
• B) Purchases account.
• C) Supplies account.
• D) Cost of Goods Sold account.

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Definitions:

Work in Process

Inventory that includes all the materials, labor, and overhead costs for products that are in the production process but not yet completed.

Property, Plant, and Equipment

Tangible long-term assets used in the operation of a business, such as buildings, machinery, and equipment.

Standard Costs

The estimated costs of materials, labor, and overhead allocated to produce a product or perform a service under normal conditions.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process.