Strand Company uses the perpetual inventory method. The company purchased an item of inventory for $80 and sold the item to a customer for $120. What effect will the sale have on the company's inventory account?

Question

Quizplus · Accepted Answer

The perpetual inventory method updates the inventory account immediately as transactions occur. Since Strand Company sold the item for $120, it means that their inventory decreased by the cost of the item, which is $80. Therefore, the account balance will decrease by $80.

Strand Company Uses the Perpetual Inventory Method