A Company That Uses the Perpetual Inventory System Sold Goods

question 151

Multiple Choice

A company that uses the perpetual inventory system sold goods for $1,000 to a customer on account.The company had purchased the inventory for $400.Which of the following journal entries correctly records the cost of goods sold?

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Definitions:

Beginning Cash Balance

The amount of cash available at the start of a given period, often used as a reference point for cash flow analysis.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value as the asset is used.

Capital Equipment Purchases

Capital equipment purchases involve the acquisition of physical assets like machinery, vehicles, or equipment used in the production process or in the administration of a business.

Credit Sales

Sales in which the payment is deferred, allowing the buyer to purchase goods or services on account and pay at a later date.