Under a perpetual inventory system

Question

Quizplus · Accepted Answer

Under a perpetual inventory system, accounting records are updated continuously to reflect the current amount of inventory on hand, making A the correct choice. B is incorrect because increases in inventory resulting from purchases are debited to the inventory account, not Purchases. C is incorrect because although a physical count may not be necessary for every year, it is still recommended to ensure the accuracy of the perpetual inventory system. D is incorrect because the purchase returns and allowances account is debited when goods are returned to vendors, not credited.

Under a Perpetual Inventory System