The Adjusting Entry at Year End Under a Perpetual Inventory

question 43

Multiple Choice

The adjusting entry at year end under a perpetual inventory system to record cost of goods sold includes a:

• A)debit to cost of goods sold and a credit to inventory for the ending balance of inventory.
• B)debit to purchases and a credit to cost of goods sold for the beginning balance of purchases.
• C)debit to cost of goods sold and a credit to inventory for the beginning balance of inventory.
• D)No adjusting entry is required under a perpetual inventory system to adjust the beginning and ending balances.

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Definitions:

Noncumulative

Pertains to dividends or other rights that do not accumulate if not paid or exercised in the period they are due.

Dividends in Arrears

Unpaid dividends on cumulative preferred stock which must be paid out before any dividends can be distributed to common stockholders.

Dividends Payable

A liability on a company's balance sheet representing the amount owed to shareholders in the form of dividends that have been declared but not yet paid.

Cumulative

Referring to the aggregate or total amount accumulated over a period of time, often used in the context of dividends or records.