Assuming the Use of the Perpetual Inventory Method Which of These

question 36

Multiple Choice

Assuming the use of the perpetual inventory method which of these entries would be a closing entry at the end of the accounting period?

• A)Debit Inventory; credit Profit and Loss Summary
• B)Debit Profit and Loss Summary; credit Inventory
• C)Debit Profit and Loss Summary; credit Purchases
• D)Debit Profit and Loss Summary; credit Cost of Sales

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Definitions:

Strike Price

The predetermined price at which the holder of an option can buy or sell the underlying asset.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy an asset at a specified price within a specified time.

Capital Gain

The profit from the sale of a capital asset for more than its purchase price.

Strike Price

The fixed price at which the holder of an option can buy (call option) or sell (put option) the underlying security or commodity.