A Company Uses the Periodic Inventory Method

question 92

Multiple Choice

A company uses the periodic inventory method.Which of the following entries would be made to record a purchase of inventory on account?

• A) The accounting entry would be a debit to Purchases and a credit to Accounts payable.
• B) The accounting entry would be a debit to Accounts payable and a credit to Purchases.
• C) The accounting entry would be a debit to Inventory and a credit to Accounts payable.
• D) The accounting entry would be a debit to Accounts payable and a credit to Inventory.

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Definitions:

Good Faith

Acting with honesty and integrity in dealings without any intent to defraud or seek an unfair advantage.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, aiming to standardize and simplify the laws across states.

Conforming Goods

Products that meet the specifications and standards outlined in a contract for sale.

Buyers and Lessees

Buyers are individuals or entities that purchase goods or property, while lessees are those who obtain the right to use goods or property through a lease agreement.