The journal entry to record the purchase of inventory on account under the periodic inventory system is:

Question

Quizplus · Accepted Answer

Under the periodic inventory system, the purchase of inventory is recorded by debiting the Purchases account and crediting the Accounts Payable account. This is because the cost of goods sold is calculated at the end of the accounting period by subtracting the ending inventory from the beginning inventory plus purchases. Therefore, the inventory account is not debited at the time of purchase.

The Journal Entry to Record the Purchase of Inventory on Account