Prepare Entries for Purchases Under a Perpetual Inventory System

question 49

Essay

Prepare entries for purchases under a perpetual inventory system.

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Definitions:

Credit Entries

Bookkeeping entries that increase the balance of liability, revenue, or equity accounts, or decrease the balance of an asset or expense account.

Both Debit And Credit Entries

Accounting entries involve both debit and credit transactions to maintain the balance in accounts, reflecting increases or decreases in assets, liabilities, and equity.

Notes Payable

A liability representing a loan or promissory note that a company must repay to the lender at a future date.

Prepaid Insurance

An asset account representing insurance payments made in advance of the period covered by the payment, to be allocated as an expense over time.