Under the Perpetual Inventory System When a Company Does NOT

question 113

Multiple Choice

Under the perpetual inventory system when a company does NOT anticipate or estimate any returns, in addition to making the entry to record the sale, the seller would

• A)debit Inventory and credit Cost of Goods Sold.
• B)debit Cost of Goods Sold and credit Purchases.
• C)debit Cost of Goods Sold and credit Inventory.
• D)make no additional entry until the end of the period.

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Definitions:

Accounts Payable

The amount of money a company owes to its creditors for goods or services purchased on credit.

Income Statement

A financial report that shows a company's revenue, expenses, and profit over a specific time period.

Accounts Receivable

Funds that customers owe to a company for products or services already provided but not yet compensated.

Sales Revenue

The total income received by a company from its sales of goods or services, before any expenses are subtracted.