Final answer:
Items added to the Inventory account in a perpetual inventory system include the purchase of inventory and transportation in costs. Transportation out, purchase discounts, purchase of non-inventory assets, and allowances for damaged inventory are not added to the Inventory account.
Step-by-step explanation:
The question relates to the perpetual inventory system used by a merchandising business and which items would be added to the Inventory account. In this system, the inventory account is updated continuously with every purchase and sale. The specific additions to the inventory account would include:
- Transportation in costs, as these are necessary to bring the inventory to a saleable location; they are considered part of the cost of inventory.
- The purchase of inventory, which directly increases the quantity of goods available for sale.
Other options mentioned would not be included in the Inventory account:
- Transportation out costs are related to delivering goods to customers and are typically recorded as an expense.
- Purchase discounts are reductions in the cost of goods purchased and would decrease the Inventory account rather than increase it.
- The purchase of a new computer, although it is an asset, is not inventory and would be recorded in a different asset account like Equipment or Computers.
- An allowance received for damaged inventory would decrease the Inventory account as it represents a reduction in the value of inventory on hand.