Using a Perpetual Inventory System, the Entry to Record the Sale

question 153

Multiple Choice

Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a

• A) debit to Sales
• B) debit to Merchandise Inventory
• C) credit to Merchandise Inventory
• D) credit to Accounts Receivable

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Definitions:

Cash

Money in the form of coins or banknotes, especially that held by a person or business.

Stock Investments

Financial assets referring to shares purchased in other companies intended for income generation or capital gains.

Cost Method

An investment accounting approach where the investment is recorded at cost and adjusted only for dividends received, not market value changes.

Equity Method

An accounting technique used by a company to record its investment in another company based on the equity it holds in that company.