If a company uses the periodic inventory system, purchases of merchandise are
A)credited to Merchandise Inventory.
B)credited to Sales.
C)debited to Purchases.
D)debited to Merchandise Inventory.

Question

Quizplus · Accepted Answer

In the periodic inventory system, purchases of merchandise are not immediately recorded in the Merchandise Inventory account. Instead, the Purchases account is used to track the total cost of merchandise purchased during an accounting period. At the end of the period, the cost of goods sold is calculated by subtracting the ending inventory from the total cost of merchandise purchased. Therefore, purchases of merchandise are debited to the Purchases account.

If a Company Uses the Periodic Inventory System, Purchases of Merchandise