When Using a Perpetual Inventory Method, What Account(s) Must Be

question 76

Multiple Choice

When using a perpetual inventory method, what account(s) must be updated when a sale is recognized?

• A) Cost of Goods Sold
• B) Supplies
• C) Merchandise Inventory
• D) Both A and C are correct.

---

Definitions:

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an asset not yet sold.

Investment Account

An account that holds securities, cash, and other assets managed by a financial institution or individual.

After-Tax Dollar Value

The amount of money remaining from earnings, investments, or transactions after all applicable taxes have been deducted.

Realized Profits

Profits that are actually made from completed transactions, as opposed to unrealized profits from increases in value.