Final answer:
In a perpetual inventory system, a company must make two entries when inventory is sold on account: one for the sale revenue and another for the cost of goods sold.
Step-by-step explanation:
In a perpetual inventory system, when a company sells inventory on account, two entries are required. The first entry is to record the sale revenue. Here, the accountant would debit Accounts Receivable and credit Sales Revenue. The second entry deals with the cost aspect of the sale, which involves debiting Cost of Goods Sold (COGS) and crediting Inventory to reflect the reduction in goods available for sale.