Asked by Nguyê?n Thi? Hô?ng Loan on Jul 26, 2024
Verified
Purchases of merchandise are typically credited to the inventory account under the perpetual inventory system.
Perpetual Inventory
A method of inventory management where record keeping is updated continuously as transactions occur, providing a real-time view of stock levels.
Inventory Account
A financial account that tracks the cost of inventory a company has purchased to sell, including raw materials, work-in-progress, and finished goods.
- Identify the differences between endless and cyclical inventory systems and their corresponding accounting activities.
Verified Answer
DK
Diarmuid KennedyAug 02, 2024
Final Answer :
False
Explanation :
Under the perpetual inventory system, purchases of merchandise are typically debited to the Inventory account, not credited. This increases the Inventory account balance to reflect the addition of new stock.
Learning Objectives
- Identify the differences between endless and cyclical inventory systems and their corresponding accounting activities.
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