In recording the cost of merchandise sold for cash using a perpetual inventory system, the effect on the accounts is:

Question

Quizplus · Accepted Answer

When merchandise is sold for cash using a perpetual inventory system, the Cost of Merchandise Sold account is increased to reflect the cost of the inventory that was sold, and the Merchandise Inventory account is decreased to reflect the reduction in inventory. There is no increase in Cash or Merchandise Inventory in this transaction. Similarly, there is no effect on Accounts Receivable as the transaction was conducted in cash.

In Recording the Cost of Merchandise Sold for Cash Using