Asked by Nathan Vandervoort on Jul 27, 2024
Verified
When companies use a perpetual inventory system, the recording of the purchase of inventory will include a debit to Purchases.
Perpetual Inventory System
An accounting method that records inventory transactions in real-time, immediately reflecting changes in inventory levels.
Purchase Of Inventory
The act of acquiring goods or raw materials that a company intends to sell in its normal business operations.
- Understand the workings and significance of the continuous inventory system, encompassing the management of returns and the calculation of the cost of goods sold.
Verified Answer
ZK
Zybrea KnightAug 03, 2024
Final Answer :
False
Explanation :
In a perpetual inventory system, the purchase of inventory is recorded by debiting the Inventory account, not the Purchases account. The Purchases account is typically used in a periodic inventory system.
Learning Objectives
- Understand the workings and significance of the continuous inventory system, encompassing the management of returns and the calculation of the cost of goods sold.
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