Under the perpetual inventory method, which of the following entries would be a closing entry at the end of the accounting period?

Question

Quizplus · Accepted Answer

The perpetual inventory method records inventory balances and cost of goods sold on a continuous basis as purchases and sales are made, so there is no need for a closing entry to adjust the inventory account. However, at the end of the accounting period, the cost of goods sold needs to be transferred to the profit or loss summary account through a closing entry. Therefore, the correct closing entry would be to debit the Profit or loss summary account and credit the Cost of sales account. This is because the Cost of sales account shows the cost of goods sold during the period and needs to be subtracted from the revenue to calculate the gross profit.

Under the Perpetual Inventory Method, Which of the Following Entries