Under the perpetual inventory system which journal entry would indicate a purchase of merchandise?

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, a purchase of merchandise is recorded by debiting the Inventory account and crediting the Cash account. Therefore, option A is the correct journal entry. Option B is incorrect because the Purchases account is used under the periodic inventory system, not the perpetual inventory system. Option C is incorrect because it implies that the Inventory account is being decreased, which is not the case when a purchase is made. Option D is incorrect because the Cost of Goods Sold account is only used when goods are sold, not when they are purchased.

Under the Perpetual Inventory System Which Journal Entry Would Indicate