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) \(\begin{array}{|l|l|l|}
• \hline\text { Sales } & \mathrm{XX} & \\
• \hline \text { Merchandise Inventory } & & \mathrm{XX} \\
• \hline
• \end{array}\)

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Definitions:

Cost Of Goods Sold

Expenses directly related to the creation of products a company sells, encompassing both material and labor costs.

Special Journals

Accounting journals designed for recording a particular type of transaction in a more efficient manner.

Cash Payments Journal

A specialized accounting journal used to record all cash outlays of a business, including expenses, asset purchases, and debt payments.

Purchases Journal

A record of all purchase transactions for inventory, usually on credit, maintained by a business.