In a perpetual inventory system,a transaction that requires two journal entries (or one compound entry)is needed when

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Goods sold for cash or on account require two journal entries: one to record the sale and one to record the cost of goods sold. In a perpetual inventory system, this information needs to be recorded continuously to keep track of inventory levels and cost of goods sold in real-time. Raw materials purchases (A), transfer of goods from Work in Process Inventory (C), and application of overhead (D) all require only one journal entry in a perpetual inventory system.

In a Perpetual Inventory System,a Transaction That Requires Two Journal