A merchandising company using a perpetual system may record an adjusting entry by
A) debiting Income Summary.
B) crediting Income Summary.
C) debiting Cost of Goods Sold.
D) debiting Sales.

Question

Quizplus · Accepted Answer

In a perpetual system, Cost of Goods Sold is continuously updated with each sale, so an adjusting entry is typically made to ensure that the inventory account is accurate. This adjustment would be made by debiting Cost of Goods Sold to decrease the balance and increase the accuracy of the inventory account.

A Merchandising Company Using a Perpetual System May Record an Adjusting