Question

All of the following accounts are used under a perpetual inventory system except:

cost of goods sold.

inventory.

purchases.

sales.

Answer 1

Answer :-

The correct answer is option C - Purchases.

Explanation :-

Under a perpetual inventory system, No purchase account is used. To record the sale of inventory two entries are made.

Example :- Sold merchandise inventory on account for $500 and cost of goods sold is $350.

1)Account receivable A/c Dr. $500

To Sales A/c $500

2) Cost of goods sold A/c Dr. $350

To Merchandise Inventory A/c $350

When we record the sale of merchandise inventory then, Cost of goods sold, Inventory and Sales A/c come under the perpetual inventory system.