The Journal Entry to Record the Purchase of Inventory Under

question 125

Multiple Choice

The journal entry to record the purchase of inventory under the perpetual system includes:

• A) a debit to Cost of Goods Sold and a credit to Merchandise Inventory.
• B) a debit to Merchandise Inventory and a credit to Accounts Payable or Cash.
• C) a debit to Accounts Receivable or Cash and a credit to Sales.
• D) Both A and C are correct.

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Definitions:

WACC

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, used to evaluate investment opportunities.

Flotation Costs

Flotation costs are the total costs incurred by a company in issuing new securities, including underwriting fees, legal fees, and registration fees.

Net Present Value

A calculation that discounts future cash flows back to their present value to evaluate and compare the profitability of investments or projects.