A Company Uses the Perpetual Inventory System

question 59

Multiple Choice

A company uses the perpetual inventory system.At year end the general ledger indicated that this company had a balance of $50,000 in the Inventory account.Actual inventory on hand per a physical count was $51,500.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:

Internal Nares

The internal nares, also known as the choanae, are openings at the back of the nasal cavity leading into the pharynx, facilitating airflow from the nose to the throat.

Nasal Cavity

The hollow space within the nose through which air flows, filtered, warmed, and humidified, also housing olfactory receptors.

Soft Palate

The soft tissue constituting the back of the roof of the mouth, separating the oral cavity from the nasal passages.

Expiratory Reserve Volume

The additional amount of air that can be forcibly exhaled after the completion of a normal expiration.