What Is the Effect of an Entry to Record the Purchase

question 70

Multiple Choice

What is the effect of an entry to record the purchase of inventory on account under the perpetual inventory system?

• A)Total assets increase
• B)Total liabilities increase
• C)Total assets are unaffected
• D)Total assets and total liabilities increase

---

Definitions:

Held For Sale

A classification for assets on the balance sheet intended to be sold within a short period, usually one year.

Discontinued Operations

Components of a business that have been sold or otherwise disposed of, and which are reported separately in the financial statements to give a clear view of ongoing operations.

Disposal Group

A set of assets and possibly liabilities that a company plans to dispose of in a single transaction or plan.

IFRS Rules

The set of international accounting standards issued by the International Accounting Standards Board (IASB) that dictate how particular types of transactions and other events should be reported in financial statements.