Under the Perpetual Inventory System, in Addition to Making the Entry

question 66

Multiple Choice

Under the perpetual inventory system, in addition to making the entry to record the sale, the seller would

• A) debit Inventory and credit Cost of Goods Sold.
• B) debit Cost of Goods Sold and credit Purchases.
• C) debit Cost of Goods Sold and credit Inventory.
• D) make no additional entry until the end of the period.

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Definitions:

Conversion Costs

Expenditures associated with transforming raw materials into final products, often comprising direct labor costs and indirect manufacturing expenses.

Equivalent Units

A concept used in process costing that converts partially completed units into an equivalent number of fully completed units to accurately measure inventory and cost of goods sold.

Weighted-Average Method

A method of costing inventory that determines the cost of goods sold and the closing inventory by averaging the cost of all items available for sale throughout the period.

Ending Inventory

The worth of merchandise on hand for purchase at the conclusion of a financial period.