If a Company Uses a Periodic Inventory System, Which of the Following

question 135

Multiple Choice

If a company uses a periodic inventory system, which of the following entries is required to record the sale of merchandise on credit?

• A) \(\begin{array} { | c | }
• \hline \text { Accounts Receivable } \\
• \hline \text { Sales Revenue } \\
• \hline
• \end{array}\)
• B) \(\begin{array} { | c | }
• \hline \text {Purchases } \\
• \hline \text { Cost of Goods Sold } \\
• \hline
• \end{array}\)
• C) \(\begin{array} { | r | }
• \hline \text { Cost of Goods Sold } \\
• \hline \text { Purchases } \\
• \hline
• \end{array}\)
• D) \(\begin{array} { | c | }
• \hline \text { Accounts Payable } \\
• \hline \text { Sales Revenue } \\
• \hline
• \end{array}\)

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Definitions:

Spin-off

A type of corporate restructuring where a company creates a new independent company by selling or distributing new shares of its existing business.

Lockup Transaction

Agreements restricting company insiders from selling their shares for a set period after an initial public offering to prevent a sudden oversupply of stock.

Synergies

Synergies are the additional value created by the combination of two companies, expected to result in cost savings or increased revenues beyond what the individual entities could achieve alone.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.