When a Company That Uses the Perpetual Inventory System Sells $\begin{array}{|l|c|c|} \hline \text { Cost of Goods Sold } & \text { XX} &\\\hline \text { Sales } & & \text { XX }\\\hline\end{array}$

question 212

Multiple Choice

When a company that uses the perpetual inventory system sells goods for cash,the journal entry to record cost of goods sold is:

• A) \(\begin{array}{|l|c|c|}
• \hline \text { Cost of Goods Sold } & \text { XX} &\\
• \hline \text { Sales } & & \text { XX }\\
• \hline
• \end{array}\)
• B) No journal entry is required.
• C) \(\begin{array}{|l|c|c|}
• \hline \text { Cost of Goods Sold } & \text { XX } \\
• \hline \text { Merchandise Inventory } && \text { XX }\\
• \hline
• \end{array}\)
• D) \(\begin{array}{|l|l|l|}
• \hline\text { Sales } & \mathrm{XX} & \\
• \hline \text { Merchandise Inventory } & & \mathrm{XX} \\
• \hline
• \end{array}\)

---

Definitions:

Accounts Receivable

Receivables from customers for goods or services already supplied by the company but payment has not been made.

Accounts Payable

Liabilities to creditors, representing the obligation to pay for goods and services received, usually within a short period of time.

Economic Order Quantity (EOQ)

A formula used by businesses to determine the optimal order quantity to minimize total inventory costs.

Carrying Costs

The total cost of holding inventory, which includes warehousing, insurance, spoilage, and opportunity costs.