Using the perpetual inventory system, the purchase of merchandise on account would include a:
A) debit to Merchandise Inventory and a credit to Accounts Payable.
B) debit to Accounts Payable and a credit to Merchandise Inventory.
C) debit to Sales and a credit to Accounts Payable.
D) debit to Sales and a credit to Accounts Receivable.

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, purchasing merchandise on account increases the Merchandise Inventory account (an asset) and increases Accounts Payable (a liability). This is recorded as a debit to Merchandise Inventory and a credit to Accounts Payable.

Using the Perpetual Inventory System, the Purchase of Merchandise on Account