If World of Sound Uses a Perpetual Inventory System, the Journal

question 26

Multiple Choice

If World of Sound uses a perpetual inventory system, the journal entry to record the sale on February 12th would include which of the following?

• A) A debit to the Cost of Goods Sold for $45,750.
• B) A credit to the Cost of Goods Sold for $45,750.
• C) A credit to Purchases for $45,750.
• D) A debit to Inventory for $45,750

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Definitions:

Creditors

Individuals or institutions that lend money or extend credit to others, expecting repayment in the future.

Debtors

Individuals or entities that owe money to others.

U.S. Monetary Policy

The Federal Reserve's actions, involving the control of interest rates and the total supply of money in circulation, aimed at achieving macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.

Real Interest Income

The interest income adjusted for inflation, representing the true purchasing power of interest earnings over time.