A Firm Uses the Periodic Inventory Method

question 76

Multiple Choice

A firm uses the periodic inventory method.Which of the following entries would be made to record a $1 100 purchase of inventory on credit,including GST?

• A)The accounting entry would be a $1 000 debit to Inventory,a $100 debit to GST clearing and a $1 100 credit to Accounts payable.
• B)The accounting entry would be a $1 100 debit to Accounts payable and a $1 100 credit to Purchases.
• C)The accounting entry would be a $1 000 debit to Purchases,a $100 debit to GST clearing and a $1 100 credit to Accounts payable.
• D)The accounting entry would be a $1 100 debit to Accounts payable,a $1 000 credit to Inventory and a $100 credit to GST clearing.

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Definitions:

Inventory Turnover

A metric that measures how often a company sells and replaces its stock of goods over a certain period, indicating the efficiency of inventory management.