Under a Perpetual Inventory System, Purchase of Inventory Is Recorded

question 52

Multiple Choice

Under a perpetual inventory system, purchase of inventory is recorded as a debit to the

• A) Supplies account.
• B) Purchases account.
• C) Inventory account.
• D) Cost of Goods Sold account.

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Definitions:

Journal

A formal record where all financial transactions of a business are initially recorded, date-wise, before being posted to the general ledger.

Trial Balance

A statement that lists all the balances of the general ledger accounts of a business at a particular time to check the correctness of double-entry bookkeeping.

Ledger Balance

The total balance of all accounts in a ledger at a particular point in time, reflecting the current financial position.

Trial Balance

An accounting table that consolidates all ledger balances into equivalent columns for debit and credit accounts.