When Using a Perpetual Inventory System, the Adjusting Entry Required

question 195

Multiple Choice

When using a perpetual inventory system, the adjusting entry required when merchandise inventory records do NOT agree with the physical count

• A) has an effect on Cost of Goods Sold.
• B) has no effect on Cost of Goods Sold.
• C) requires reporting a loss when actual is higher than records.
• D) requires reporting a gain when actual is lower than records.

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Definitions:

Internal User

Individuals within an organization, such as managers and employees, who use financial information for decision-making purposes.

Company Treasurer

An executive officer responsible for managing the organization's financial operations, including investments, capital structure, and liquidity management.

Creditors' Information

Financial data and other information about a debtor that is shared with or accessible to creditors, often used in assessing credit risk or in making lending decisions.

Extending Credit

The act of providing goods, services, or money to a borrower under the agreement that repayment will occur at a later date.