When Merchandise Is Purchased on Account Under the Perpetual Inventory

question 21

Multiple Choice

When merchandise is purchased on account under the perpetual inventory system, the journal entry is:

• A)debit Purchases and credit Accounts Payable.
• B)debit Accounts Payable and credit Inventory.
• C)debit Inventory and credit Accounts Payable.
• D)debit Accounts Payable and credit Purchases.

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Definitions:

Financial Advantage

The benefit obtained from making certain financial decisions or investments, often resulting in savings, earnings, or a stronger financial position.

Intermediate Products

Goods that are in a middle stage of production, not yet final products, but also not raw materials; used as input in the production of other goods.

Processed Further

The decision or action to continue the transformation of a product beyond the initial production phase to add value.

Intermediate Products

Goods that are produced in one manufacturing process and then used as inputs in another process to create final products.