Using a Perpetual Inventory System, the Respective Normal Account Balances

question 62

Multiple Choice

Using a perpetual inventory system, the respective normal account balances of Merchandise Inventory, Sales Returns and Allowances, and Cost of Goods Sold are

• A) credit, credit, credit.
• B) debit, debit, debit.
• C) debit, credit, credit.
• D) debit, debit, credit.

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Definitions:

Basic EOQ Model

The Economic Order Quantity model, a formula used to determine the optimal quantity of inventory to order, minimizing total inventory costs.

Ordering Cost

Expenses incurred in placing and processing orders for products or materials, including administrative costs and the cost of receiving and inspecting the items.

Carrying Cost

The total cost of holding inventory, including storage costs, insurance, and depreciation, among others.

Economic Order Quantity Model

A formula used in inventory management to determine the optimal order size that minimizes total inventory costs.