Which of the following entries would be made to record the purchase of inventory on account, if a company uses the perpetual inventory system? A.a debit to Purchases and a credit to Accounts Payable B.a debit to Accounts Payable and a credit to Merchandise Inventory C.a debit to Merchandise Inventory and a credit to Accounts Payable D.a debit to Accounts Payable and a credit to Purchases

Answered: a debit to Accounts Payable and a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Which of the following entries would be made to record the purchase of inventory on account, if a company uses the perpetual inventory system?

a debit to Purchases and a credit to Accounts Payable

a debit to Accounts Payable and a credit to Merchandise Inventory

a debit to Merchandise Inventory and a credit to Accounts Payable

a debit to Accounts Payable and a credit to Purchases

Expert Solution

Step 1

A perpetual inventory system is an inventory management approach that uses an inventory management system to track when merchandise is sold in real time. Changes in inventory will be recorded in a perpetual inventory system at the moment of transaction.