The Botanical Boutique Uses the Perpetual Inventory System

question 5

Multiple Choice

The Botanical Boutique uses the perpetual inventory system. At year end the general ledger indicated that the company had a balance of $24,000 in the Inventory account. Actual inventory on hand per a physical count was $19,000. What action does the company now need to take?

• A)No action is required because the amount is not material.
• B)Debit Cost of Goods Sold and credit Inventory, $5,000.
• C)Debit Purchases and credit Cost of Goods Sold, $5,000.
• D)Debit Inventory and credit Cost of Goods Sold, $5,000.

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Definitions:

Taggants

Chemical or physical markers added to materials, such as explosives or products, to enable tracing their origin or ensuring their authenticity.

Trinitrotoluene (TNT)

A yellow, odorless solid that is a powerful explosive compound, chemically designated as C7H5N3O6.

Nitration

A chemical process that introduces nitro groups into an organic compound, commonly used in the synthesis of explosives and nitrated polymers.

Taggants

Taggants are chemical or physical markers added to materials to allow tracking or identification of products and substances for safety, authentication, or quality control.