Question

When the perpetual inventory method is being used, the accountant debits __________ __________ and credits Accounts Payable (or Cash) when goods are purchased and debits Cost of Goods Sold and credits __________ __________ when gods are sold, along with the proper sales entry.

Answer 1

Merchandise Inventory

Cost of Goods Sold

Merchandise Inventory

Step-by-step explanation:

perpetual inventory method of keeping inventory is a system which updates inventory immediately and account payable or cash when goods are purchased and also updates cost of goods sold and inventory for sales made.. The system is such that Merchandise Inventory is debited and account payable or cash credited when goods are purchased. By the time sales take place, cost of sales is debited and merchandise inventory credited for the value of sales.