Which of the Following Entries Would Be Made to Record

question 90

Multiple Choice

Which of the following entries would be made to record the purchase of inventory on account,if a company uses the perpetual inventory system?

• A) a debit to Purchases and a credit to Accounts Payable
• B) a debit to Accounts Payable and a credit to Purchases
• C) a debit to Merchandise Inventory and a credit to Accounts Payable
• D) a debit to Accounts Payable and a credit to Merchandise Inventory

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Definitions:

Break-Even

The point at which total costs and total revenues are equal, resulting in neither profit nor loss.

Margin of Safety

Margin of safety represents the difference between actual or projected sales and the break-even sales levels, measuring the buffer a company has before it incurs a loss.

Break-Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Variable Costs

Costs that change in proportion to the level of goods or services produced by a business.