When the Perpetual Inventory System Is Used, the Inventory Sold

question 24

Multiple Choice

When the perpetual inventory system is used, the inventory sold is shown on the income statement as

• A) cost of merchandise sold
• B) purchases
• C) purchases returns and allowances
• D) net purchases

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Definitions:

Profit Margins

The percentage of revenue that remains as profit after all costs and expenses are subtracted from total sales.

Tariff

A tax imposed by a government on goods and services imported from other countries, affecting trade.

Voluntary Quota

A self-imposed limit on the quantity of goods a country exports or imports.

Elasticity of Supply

A measure of how much the quantity supplied of a good changes in response to a change in the price of that good.