Under a Perpetual Inventory System, Acquisition of Merchandise for Resale

question 164

Multiple Choice

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

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

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Definitions:

Plant Assets

Long-term tangible assets that are used in the operation of a business and are not intended for resale.

Depreciation Expense

Apportioning a physical asset’s cost over its estimated useful life.

Straight-Line Method

The straight-line method is a technique of allocating an asset's cost evenly throughout its useful life, commonly used for depreciation and amortization calculations.

Salvage Value

The approximated market price of an asset upon completing its useful life.