Under the perpetual inventory system,the entry to recognize inventory losses usually contains a
A)debit to Cost of Goods Sold.
B)debit to Merchandise Inventory.
C)credit to Gross Margin.
D)credit to Cash.

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, inventory losses are recognized by debiting the Cost of Goods Sold account. This is because inventory losses represent a decrease in the value of inventory, which ultimately affects the cost of goods sold. Therefore, a debit entry to Cost of Goods Sold is necessary in order to reflect this decrease in inventory value. Choices B, C, and D are incorrect because they do not reflect the appropriate account to be debited in this scenario.

Under the Perpetual Inventory System,the Entry to Recognize Inventory Losses