On April 1,a hardware retailer purchases inventory on account for $1500.Which of the following correctly describes the effect of this transaction? Assume a perpetual inventory system is used.
A)Merchandise Inventory decreases by $1500 and Accounts Receivable decreases by $1500.
B)Merchandise Inventory decreases by $1500 and Accounts Receivable increases by $1500.
C)Merchandise Inventory increases by $1500 and Accounts Payable decreases by $1500.
D)Merchandise Inventory increases by $1500 and Accounts Payable increases by $1500.

Question

Quizplus · Accepted Answer

In a perpetual inventory system, the purchase of inventory on account increases the Merchandise Inventory account and increases the Accounts Payable account. Therefore, choice D is the correct answer.

On April 1,a Hardware Retailer Purchases Inventory on Account for $1500.Which