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:

Appropriating Retained Earnings

The process of allocating retained earnings, often to specific purposes or reserves, as determined by a company's management or board of directors.

Accumulated Depreciation

The total depreciation for a fixed asset that has been charged to expense since that asset was acquired and made available for use.

Retained Earnings

Accumulated net income after dividends that is reinvested in the business.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, a key indicator of a company's financial health.