Final answer:
Both perpetual and periodic inventory systems debit Raw Materials Inventory when raw materials are purchased, reflecting an increase in the business's assets. This entry records the acquisition of materials that are intended to be used in production.
Step-by-step explanation:
The question refers to the accounting treatment of raw materials in inventory systems at the time of purchase. In both the perpetual and periodic inventory systems, businesses debit Raw Materials Inventory to record the acquisition of raw materials. By debiting Raw Materials Inventory, the business reflects an increase in its assets, specifically in the raw materials that are yet to be used in production.
In a perpetual inventory system, this transaction is recorded immediately at the time of purchase, ensuring that inventory levels are updated continuously. On the other hand, a periodic inventory system updates inventory balances at the end of the accounting period, at which point they calculate the cost of goods sold based on beginning inventory, plus purchases, minus ending inventory. However, the initial entry to record the purchase of raw materials is the same in both systems, which includes debiting Raw Materials Inventory.