If a Perpetual Inventory System Is Used Instead of a Periodic

question 98

Multiple Choice

If a perpetual inventory system is used instead of a periodic system, identify the accounts that the
Merchandise Inventory account replaces.

• A)Purchases, Sales, Freight In
• B)Purchases, Cost of Goods Sold
• C)Purchases, Accounts Receivable, Freight In
• D)Purchases, Purchase Returns and Allowances, Freight In

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Definitions:

Market Price

The current price at which a goods or service can be bought or sold in a particular market.

Consumer Surplus

The gap between what consumers are prepared and capable of paying for a product or service and what they end up spending.

Supply Change

An alteration in the quantity of goods or services that producers are willing and able to sell in the market, due to factors like price, technology, or input costs.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.