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

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, a purchase of goods is recorded by debiting the Inventory account and crediting the Cash (or Accounts Payable) account. Therefore, option A is the correct choice. Option B is incorrect because the Purchases account is used only under the periodic inventory system. Option C is incorrect because it is the journal entry to record the cost of goods sold when the goods are sold. Option D is incorrect because it is the journal entry to adjust the inventory account at the end of the period for the cost of goods sold.

Under the Perpetual Inventory System Which Journal Entry Would Indicate