A company uses process costing and a perpetual inventory system.When finished products are sold,Cost of Goods Sold is debited and Finished Goods Inventory is credited.

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In a process costing system, the cost of the product is allocated to each unit based on the total cost of the production process, and in a perpetual inventory system, the inventory is updated continuously. When a finished product is sold, the cost of goods sold is debited, and finished goods inventory is credited, as this represents a transfer of inventory from finished goods to cost of goods sold.

A Company Uses Process Costing and a Perpetual Inventory System