A Company Uses the Perpetual Inventory System

question 20

Multiple Choice

A company uses the perpetual inventory system.The inventory account balance is $50,000.An actual count of inventory reveals that actual inventory is $43,000.Which of the following would be included in the required adjusting entry?

• A) A $43,000 credit to Inventory would be required.
• B) A $50,000 debit to Cost of goods sold would be required.
• C) A $7,000 credit to Cost of goods sold would be required.
• D) A $7,000 credit to Inventory would be required.

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Definitions:

December

The twelfth and final month of the year in the Gregorian calendar.

Production

The process of creating goods and services using labor, machinery, tools, and chemical or biological processing or formulation.

December

The last month of the year according to the Gregorian calendar, which is the twelfth.

Cash Disbursements

Payments made by a business in cash or cash equivalents, including expenses, debt payments, and distributions to owners.