When a Company Uses the Perpetual Inventory Method,which of the Following

question 154

Multiple Choice

When a company uses the perpetual inventory method,which of the following would be the entry to adjust inventory to lower-of-cost-or-market?

• A) Debit Purchases and credit Inventory
• B) Debit Inventory and credit Purchases
• C) Debit Cost of goods sold and credit Inventory
• D) Debit Inventory and credit Cost of goods sold

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Definitions:

Accrued Wages

Wages that have been earned by employees but have not yet been paid by the employer.

Accrued Revenues

Income that has been earned but not yet received; recorded to recognize revenue prior to cash receipt.

Depreciation Expense

The allocated expense of a tangible asset over its useful life, reflecting the use and wear and tear of the asset.

Income Tax Rate

The proportion or percentage of income that is paid as tax to the government, varying according to income levels or earnings.