A company that makes the following journal entry at the time of purchasing inventory is using which of the following inventory systems? Dr. Purchases $\quad \mathrm { xxx }$
Cr. Accounts Payable $\quad \mathrm { xxx }$
A)Periodic system
B)Perpetual system
C)Just-in-time system
D)Specific identification system

Question

A company that makes the following journal entry at the time of purchasing inventory is using which of the following inventory systems? Dr. Purchases $\quad \mathrm { xxx }$ 
Cr. Accounts Payable $\quad \mathrm { xxx }$
A)Periodic system
B)Perpetual system
C)Just-in-time system
D)Specific identification system

Quizplus · Accepted Answer

The use of a "Purchases" account to record inventory acquisitions is characteristic of the periodic inventory system, where updates to inventory levels and cost of goods sold are made periodically, typically at the end of an accounting period, rather than continuously.

A Company That Makes the Following Journal Entry at the Time