When Using a Perpetual Inventory System

question 79

Multiple Choice

When using a perpetual inventory system,

• A) no Purchases account is used.
• B) a Cost of Goods Sold account is used.
• C) two entries are required to record a sale.
• D) All of these answer choices are correct.

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Definitions:

Finance Company

A type of financial institution that provides loans to consumers and businesses, often for specific purchases such as vehicles, equipment, or home improvements.

Holds a Lien

Refers to the legal right or interest that a lender has on a property, until a debt owed by the property owner is paid off.

Implied Warranties

Legally inferred guarantees that ensure products meet minimum quality standards, providing protection beyond explicit statements.

Reasonably Fit

A measure of whether a product meets the ordinary purposes it is intended for, based on what a reasonable person would expect.