On April 1,a hardware retailer purchases inventory on account for $1,800.Which of the following correctly describes the effect of this transaction? Assume a perpetual inventory system is used.
A) Merchandise Inventory decreases by $1,800 and Accounts Receivable decreases by $1,800.
B) Merchandise Inventory decreases by $1,800 and Accounts Receivable increases by $1,800.
C) Merchandise Inventory increases by $1,800 and Accounts Payable decreases by $1,800.
D) Merchandise Inventory increases by $1,800 and Accounts Payable increases by $1,800.

Question

Quizplus · Accepted Answer

A purchase on account would increase Merchandise Inventory, since inventory has been acquired, and increase Accounts Payable, since payment for the inventory has not yet been made. Therefore, the correct choice is D.

On April 1,a Hardware Retailer Purchases Inventory on Account for $1,800.Which