Question

Margot Inc, which uses the perpetual inventory system, purchases 500 units of inventory to be held for resale. Margot should debit the purchase to:

A- Purchases
B- Inventory
C- Cost of Goods Sold
D- Raw Materials

Answer 1

When using the perpetual inventory system, Margot Inc should debit the purchase to Inventory.

Step-by-step explanation:

When using the perpetual inventory system, Margot Inc should debit the purchase to Inventory. This is because the perpetual inventory system continuously updates inventory records, so when Margot purchases 500 units of inventory, it increases the quantity and value of the inventory on hand. By debiting the purchase to Inventory, Margot properly reflects the new inventory acquisition.