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:

Long Run

A period in economics where all factors of production and costs are variable, allowing for complete industry adjustment.

Fixed Inputs

Resources or factors of production that cannot be increased or decreased in the short run, often including capital and land.

Cross Elasticity

A measure of how the quantity demanded of one good responds to a change in the price of another good, indicating the substitutability or complementarity between the two goods.

Coffee

A popular beverage made from roasted and ground beans of the Coffea plant, consumed for its stimulating effects.