When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry?

Question

Quizplus · Accepted Answer

When merchandise is purchased on account with a perpetual inventory system, the inventory account is debited and the accounts payable account is credited. Therefore, the correct entry is debit Merchandise Inventory; credit Accounts Payable. Choice A is incorrect because it reverses the accounts. Choice C is incorrect because cash discounts are only recorded when they are taken, not when purchases are made. Choice D is incorrect because it would be the entry if there was no accounts payable involved.

When Purchases of Merchandise Are Made on Account with a Perpetual