Under the perpetual system,the purchase of merchandise is recorded by a:

Question

Quizplus · Accepted Answer

Under the perpetual system, the purchase of merchandise is recorded by debiting (increasing) Merchandise Inventory and crediting (decreasing) either Accounts Payable (if purchased on credit) or Cash (if purchased for cash). This reflects the increase in inventory and the decrease in cash or increase in the liability of the business. Cost of Goods Sold (option B) is debited when the merchandise is sold, not when it is purchased. Option C is incorrect because Purchases is an account that is used in the periodic system to record purchases of merchandise during the accounting period. Option D is also incorrect because it suggests that Accounts Payable is debited when merchandise is purchased, which is not the case.

Under the Perpetual System,the Purchase of Merchandise Is Recorded by A