A Company Uses the Perpetual Inventory System

question 99

Multiple Choice

A company uses the perpetual inventory system. At year end the general ledger indicated that this company had a balance of $47,000 in the Inventory account. Actual inventory on hand per a physical count was $48,500. What action does the company now need to take?

• A)No action is needed; the difference between the ledger and actual is less than 5%.
• B)The company needs to debit Cost of Goods Sold and credit Inventory, $1,500.
• C)The company needs to debit Inventory and credit Cost of Goods Sold for $1,500.
• D)The company should debit the Purchases account and credit Cost of Goods Sold.

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Definitions:

Clinical

Pertaining to the direct observation and treatment of patients.

Maintenance Agreement

A contract outlining the terms for the maintenance and upkeep of equipment, software, or buildings.

Checkups

Scheduled medical examinations or assessments to maintain or evaluate health status, often part of routine health care.

Cleaning

The process of removing dirt, germs, and impurities from surfaces or objects, often using water, detergents, or disinfectants.