The perpetual system requires a second journal entry, increasing cost of goods sold and decreasing merchandise inventory when goods are sold.

Question

Quizplus · Accepted Answer

In a perpetual inventory system, each time a sale is made, a journal entry is recorded to increase the cost of goods sold (expense) and decrease merchandise inventory (asset) to reflect the sale and the outflow of inventory.

The Perpetual System Requires a Second Journal Entry, Increasing Cost