A company uses the perpetual inventory method. Which of the following entries would be made to record a sale of merchandise on account?
A) The accounting entry would be a debit to Accounts receivable and a credit to Sales revenue.
B) The accounting entry would be a debit to Sales revenue and a credit to Accounts receivable.
C) The accounting entry would be a debit to Cost of goods sold and a credit to Inventory.
D) Both A and C would be necessary to record the sale.

Question

Quizplus · Accepted Answer

Under the perpetual inventory method, two entries are necessary to record a sale: one to recognize the revenue (debit Accounts Receivable, credit Sales Revenue) and another to recognize the cost of the goods sold (debit Cost of Goods Sold, credit Inventory).

A Company Uses the Perpetual Inventory Method