If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger.

Question

Quizplus · Accepted Answer

In a perpetual inventory system, the cost of merchandise sold is continuously updated as each sale is made. Therefore, there is a separate Cost of Merchandise Sold account in the general ledger to track these costs. This account is not necessary in a periodic inventory system, where the cost of goods sold is calculated only at the end of the period.

If the Perpetual Inventory System Is Used, an Account Entitled