Which of the following is true under the perpetual inventory system?
A) One entry is required to record a sales return.
B) Cost of goods sold cannot be determined unless a physical inventory is taken.
C) Two entries are required to record a sale.
D) A separate account for purchases is required.

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, two entries are required to record a sale: one to record the revenue from the sale and another to record the cost of goods sold (COGS), thereby reducing the inventory account. This system continuously updates inventory records, including COGS, making it possible to determine COGS without a physical inventory count.

Which of the Following Is True Under the Perpetual Inventory