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Match Each of the Following Statements with the Appropriate Inventory

Question 176

Matching

Match each of the following statements with the appropriate inventory systems.

Premises:
Uses a separate account for recording purchases.
Requires that purchases be recorded at their cash equivalent cost.
Requires that two concurrent journal entries be made to record a purchase.
Cost of goods sold cannot be determined until a physical count is taken.
Inventory account is increased for each purchase and decreased for each sale.
Used to reveal any inventory shortages and shrinkage that occur during the period.
Responses:
The perpetual inventory system.
The periodic inventory system.
Both the perpetual and periodic inventory systems.
Neither the perpetual nor the periodic inventory systems.

Correct Answer:

Uses a separate account for recording purchases.
Requires that purchases be recorded at their cash equivalent cost.
Requires that two concurrent journal entries be made to record a purchase.
Cost of goods sold cannot be determined until a physical count is taken.
Inventory account is increased for each purchase and decreased for each sale.
Used to reveal any inventory shortages and shrinkage that occur during the period.
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