Gross profit will result if: sales revenues are greater than cost of goods sold. Under a perpetual inventory system, when goods are purchased for resale by a company: purchases on account are debited to Inventory The sales accounts that normally have a debit balance are: A credit sale of $750 is made on June 13, terms
2/10, net/30. A return of $50 is granted on June 16. The amount received as payment in full on June 23 is: Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system? To
record the sale of goods for cash in a perpetual inventory system: two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory. The steps in the accounting cycle for a merchandising company are
the same as those in a service company except: an
additional adjusting journal entry for inventory may be needed in a merchandising company. The multiple-step income statement for a merchandising company shows each of the following features except: investing activities section. If sales revenues are $400,000, cost of goods sold is $310,000, and operating expenses are $60,000, the gross profit is: A single-step income statement: reports sales revenues and “Other revenues and gains” in the revenues section of the income statement. Which of the following appears on both a
single-step and a multiple-step income statement? Companies may use either the perpetual system or the periodic system to account for inventory. Under the periodic system, merchandise purchases are recorded in the purchases account, and the inventory account balance is updated only at the end of each accounting period. Perpetual inventory systems have traditionally been associated with companies that sell small numbers of high‐priced items, but the development of modern scanning and computer technology has enabled almost any type of merchandiser to consider using this system. Under the perpetual system, purchases, purchase returns and allowances, purchase discounts, sales, and sales returns are immediately recognized in the inventory account, so the inventory account balance should always remain accurate, assuming there is no theft, spoilage, or other losses. Consider several entries under both systems. The reference columns are removed from the illustration to simplify what you're seeing. (Note: Ap stands for accounts payable, and AR stands for accounts receivable.)
As the two sets of circled entries indicate, two things happen when there is a sale or a sales return. First, the sales transaction's effect on revenue must be recognized by making an entry to increase accounts receivable and the sales account. Second, the flow of merchandise between inventory (an asset) and cost of goods sold (an expense) is recorded in accordance with the matching principle. A sales return has the opposite effect on the same accounts. Under the periodic system, the inventory and cost of goods sold accounts are updated only periodically, but under the perpetual system, entries that recognize a transaction's effect on these accounts occur when the revenue from the sale is recognized. For convenience, a sale or sales return can be recorded under the perpetual system with a compound entry that lists all four accounts.
 The general journal provides a simple, consistent format to present new information. However, most companies would record the sale in a sales journal. When the perpetual inventory system is used in what account are purchases recorded?In a perpetual inventory system, purchases are recorded in the Merchandise Inventory account. In a periodic inventory system, purchases are recorded in the Purchases account. Identify the four special journals typically used by a business. Purchases journal, cash payments journal, sales journal, cash receipts journal.
When goods are sold under the perpetual inventory system?Under the perpetual system, two transactions are recorded at the time that the merchandise is sold: (1) the amount of the sale is debited to Accounts Receivable or Cash and is credited to Sales, and (2) the cost of the merchandise sold is debited to the account Cost of Goods Sold and is credited to Inventory.
What happens in a perpetual inventory system?In a perpetual inventory system, software records changes into a sales revenue account each time the company makes a sale or purchases new inventory. This process of recording sales ensures that the accounting records reflect accurate balances in the accounts affected.
What account is debited for the acquisition of merchandise for resale in a perpetual inventory system?Under a perpetual inventory system, the acquisition of merchandise for resale is debited to purchases accounts.
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