Under a Perpetual Inventory System, Purchase of Inventory Is Recorded

question 67

Multiple Choice

Under a perpetual inventory system, purchase of inventory is recorded as a debit to the

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

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Definitions:

Expenses Paid

Outflows or other using-up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major operations.

Liabilities

Liabilities refer to the financial obligations or debts that a company owes to others, which must be paid back in the future.

Private Company

A business entity owned by private investors, shareholders or owners, and not publicly traded on stock exchanges.

ASPE

A collection of accounting principles for private corporations in Canada.