Mack Industries Uses the Perpetual Inventory System

question 22

Multiple Choice

Mack Industries uses the perpetual inventory system. What is the entry to record a $450 merchandise purchase on account from Nickel Corporation?

• A) Debit Accounts Payable for $450; credit Sales for $450.
• B) Debit Purchases for $450; credit Accounts Payable for $450.
• C) Debit Purchases for $450; credit Merchandise Inventory for $450.
• D) Debit Merchandise Inventory for $450; credit Accounts Payable for $450.

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Definitions:

Recession

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in successive quarters.

Investment Goods

Products purchased for future production or used to produce other goods, rather than being consumed by the buyer.

Time Inconsistency

The tendency for preferences or decisions to change over time in a way that a person's earlier preferences or decisions become inconsistent with their later ones.

Inflationary

Pertaining to or characterized by inflation, a scenario in which the general price level of goods and services rises, eroding purchasing power.