Under a Perpetual Inventory System, the Journal Entry Needed to Record

question 78

Multiple Choice

Under a perpetual inventory system, the journal entry needed to record the sale of a job includes a

• A)debit to finished goods inventory and credit to cost of goods sold.
• B)debit to cost of goods sold and credit to finished goods inventory.
• C)debit to sales revenue and credit to accounts receivable.
• D)debit to cost of goods sold and credit to sales revenue.

---

Definitions:

Noncash Investing

Transactions that involve the acquisition or disposal of non-cash assets, such as property, plant, and equipment, through means other than cash payments.

Operating Activities

Activities directly related to the business's primary operations, such as manufacturing, distributing, marketing, and selling a product or service.

Gain

The profit realized from the sale of assets or investments when the selling price exceeds the purchase price.

Indirect Method

A way of reporting cash flows from operating activities that begins with net income and adjusts for changes in balance sheet accounts to calculate cash provided by operations.