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

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Definitions:

Manufacturer

A company or individual that makes goods for sale using raw materials and components.

Merchandiser

A business or person engaged in the sale of goods, typically those purchased from manufacturers and sold to consumers.

Master Budget

A comprehensive financial planning document that includes all of the lower-level budgets within an organization, projecting its overall financial activities.

Service Revenue Budget

It outlines the expected revenue from services provided over a specific period, forming part of a company's overall budgeting process.