The Account Distribution for Sales of Inventory on Account Is

question 3

Multiple Choice

The account distribution for sales of inventory on account is:

• A)Debit Merchandise Inventory and Accounts Receivable; credit Cost of Goods Sold and Sales.
• B)Debit Accounts Receivable/customer and Cost of Goods Sold; credit Sales and Merchandise Inventory.
• C)Debit Accounts Payable/vendor and Cost of Goods Sold; credit Accounts Receivable/customer and Checking.
• D)None.

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Definitions:

Liabilities

Financial obligations or debts owed by a business to external parties or individuals, which must be repaid at a future date.

Wages Owed

The total amount of compensation that a company owes to its employees for work performed but not yet paid.

Cash Account

A ledger account that represents the amount of cash a company has on hand at any given time.

Credit

An accounting entry that either decreases assets or increases liabilities and equity on a company's balance sheet, or an entry on the right side of a double-entry bookkeeping system that represents the addition of value to an account.