Under a periodic inventory system, acquisition of merchandise is debited to the
A) Merchandise Inventory account.
B) Cost of Goods Sold account.
C) Purchases account.
D) Accounts Payable account.

Question

Quizplus · Accepted Answer

Under a periodic inventory system, acquisition of merchandise is debited to the purchases account. This is because the periodic inventory system updates the inventory balance only at the end of the period, based on the physical count and valuation of the inventory. Thus, the purchases account serves as an intermediary account to track the total cost of goods purchased during the period. At the end of the period, the purchases account is closed to the merchandise inventory account, increasing the balance of the latter account.

Under a Periodic Inventory System, Acquisition of Merchandise Is Debited