Under the Perpetual Inventory System

question 132

Multiple Choice

Under the perpetual inventory system

• A)the cost of each item is recorded in the Merchandise Inventory account when it is purchased.
• B)when an inventory item is sold,its cost is transaferred to the Cost of Goods Sold account.
• C)the balance of the Merchandise Inventory account equals the cost of goods on hand.
• D)All of these choices.

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Definitions:

Monthly Depreciation

The apportionment of the cost of an asset over its useful life on a monthly basis.

Double-Declining-Balance

A method of accelerated depreciation which doubles the straight-line depreciation rate.

Book Value

The net value of a company's assets minus its liabilities, often used to evaluate its financial health.

Salvage Value

The approximated value of an asset at the close of its functional life.