Asked by Savanna Griffin on Apr 24, 2024
Verified
When the perpetual inventory system is used, the inventory sold is shown on the income statement as
A) cost of goods sold
B) purchases
C) purchases returns and allowances
D) net purchases
Perpetual Inventory System
A method of accounting for inventory that updates the inventory levels continuously after each purchase, sale, or return.
Income Statement
An income statement is a financial statement that shows a company's revenues and expenses over a specific period, culminating in net income or loss.
- Gain an understanding of how inventory transactions are recorded in accounting mechanisms.
Verified Answer
JB
Ja'ynia Brown5 days ago
Final Answer :
A
Explanation :
In the perpetual inventory system, the cost of goods sold is continually updated with each sale, so the inventory sold is recorded as cost of goods sold on the income statement.
Learning Objectives
- Gain an understanding of how inventory transactions are recorded in accounting mechanisms.