An Entry to Record the Purchase of Inventory on Account

question 101

Multiple Choice

An entry to record the purchase of inventory on account under the perpetual inventory method

• A) increases total assets.
• B) decreases total liabilities.
• C) decreases total assets.
• D) increases total equity.

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Definitions:

Bulk Sales Act

Legislation designed to protect creditors by requiring a business owner to notify them before making a large, non-ordinary sale of inventory.

Merchant

An individual or business entity engaged in the sale of goods, especially on a large scale or with foreign countries.

Grain

A small, hard, dry seed harvested from cereal plants or grasses, used for food.

Quantities

Refers to the specific amounts or numbers of items, often used in the context of purchases, manufacturing, or inventory.