The Journal Entry to Record the Purchase of Inventory on Account

question 50

Multiple Choice

The journal entry to record the purchase of inventory on account under the periodic inventory system is:

• A) debit inventory and credit accounts payable.
• B) debit purchases and credit accounts payable.
• C) debit cost of goods sold and credit accounts payable.
• D) debit inventory and credit cost of goods sold.

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Definitions:

Opportunity Cost

The value of the next best alternative that is foregone when making a decision or choosing one option over another.

Airplane

A powered flying vehicle with fixed wings and a weight greater than that of the air it displaces, used for transportation.

Car

A wheeled motor vehicle used for transportation, typically running on roads and able to carry a small number of people.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors, facilitating beneficial trade and specialization.