The Cloud Company employs a perpetual inventory system and the McKenzie Corporation uses a periodicbsystem. Describe the differences between the two systems in accounting for the following events: (1) purchase of merchandise, (2) sale of merchandise, (3) return of merchandise to supplier, and (4) payment of freight charge on merchandise purchased. Indicate which inventory-related accounts would be debited or credited for each event.

Q: All descriptions reveal the characteristics of a periodic inventory system, EXCEPT: Merchandise…

A: The correct option is: Inventory record is always up-to-date

Q: Max Company has chosen to use an allowance account. When the cost of goods sold method is used with…

A: Full form of NRV is Net Realizable Value.

Q: Assume the perpetual inventory system is used unless stated otherwise. Round all numbers to the…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: der the periodic inventory system, all increases and decreases in inventory, such as purchases,…

A: Solution: False.  Under periodic inventory system Daily inventory records are not maintained.

Q: The entry to record inventory shrinkage under a perpetual inventory system would include a debit to:…

A: Explanation: When There is Inventory shrinkage Under the perpetual inventory system The following…

Q: When merchandise purchased on account is returned under the perpetual inventory system, the buyer…

A: The journal entries are prepared to keep the record of day to day transactions of the business.

Q: Under the perpetual inventory​ system, the journal entry to record the freight paid by the seller on…

A: Under perpetual inventory system, inventory account is used instead of purchases account. For every…

Q: Identify whether each description best applies to a periodic or a perpetual inventory system.…

A: Perpetual inventory system: Perpetual Inventory System refers to the inventory system that maintains…

Q: Under the periodic inventory system, the journal entry to record the cost of merchandise sold at the…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: Under the perpetual inventory system, increases and decreases in inventory are recorded through the…

A: Solution: Under perpetual inventory system, inventory records are updated with every purchase and…

Q: In a periodic inventory system, the cost of merchandise purchased includes the cost of

A: Statement is TRUE  In a periodic inventory system, the cost of merchandise purchased includes the…

Q: Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company…

A: Periodic inventory is a system of inventory valuation where the business’s inventory and cost of…

Q: 2. The entry to record the return of $25 of inventory to a supplier under the perpetual inventory…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: hich of the following accounts is unique to a merchandising entity that uses the periodic inventory…

A: The periodic inventory system does not record each transaction at the time they occurred. It…

Q: Which of the following accounts is used in the periodic inventory system but not used in the…

A: Periodic inventory system:   A periodic inventory system is one of the forms of inventory valuation.…

Q: Which of the following accounts would be included in the chart of accounts of a merchandising…

A: Periodic Inventory System: A periodic inventory system is a form of inventory valuation where the…

Q: e entry to record the return of $250 of inventory to a supplier under the perpetual inventory system…

A: Solution: The entry to record the return of $250 of inventory to a supplier under the perpetual…

Q: General Journal Page 2 Date Account Titles and Description PR Dr. Cr. 201X Jun. 3 Merchandise…

A:

Q: Which of the following is not a characteristic of a perpetual inventory system? O Cost of goods sold…

A: Here in this question we are required to answer which of the characteristics is not of perpetual…

Q: Which of the following statements about a periodic inventory system is true? a. The periodic system…

A: Periodic inventory system means where day to day in or out of goods is not recorded and value of…

Q: When merchandise that was sold is returned, a credit to sales returns and allowances is made by the…

A: As per perpetual inventory system, inventory records are updated after every transaction.  When…

Q: The inventory accounts of a manufacturer are ________________, _____________________and…

A: The inventory accounts of a manufacturer are _______Raw material inventory_, Work in process…

Q: Cost of goods sold is debited each time a sale is made under which of the following inventory…

A: The carrying value of the goods that are sold during a given period of time are termed as cost of…

Q: What is the method of accounting of inventory in which the cost of goods is recorded each time a…

A: The cost of goods included the cost of goods that are sold during the period.

Q: A company using a perpetual inventory system that returns goods previously purchased on credit would…

A: What is perpetual inventory system? It is a system which record the changes in inventory(purchased…

Q: The transactions that follow took place under the perpetual inventory system. Record each…

A: Ledgers are the accounts prepared by a business to prepare the financial statements and contains as…

Q: Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and…

A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sales. Cost…

Q: When preparing a worksheet for a merchandising company using periodic inventory system, which…

A: 1. The income statement contains all temporary accounts and the balance sheet contains all the…

Q: When a retailer sells merchandise to a customer on credit which one of the following accounts is…

A: Selling merchandise to the customer would include two journal entries, one is for selling goods, and…

Q: Which of the following accounts will not be found in the cost of merchandise sold section of the…

A: Income statement: The income statement is a financial statement that shows the net income earned or…

Q: The firm maintains a perpetual inventory system. Determine the cost of merchandise sold for each…

A:

Q: • Explain why there isn't there a "Cost of merchandise sold" expense for a service business.…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: When using the periodic inventory system, which of the following generally would not be separately…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: Which one of the following statements is not true? a. A company using the periodic system does not…

A: At the end of the period, there is still a need to match the inventory value with the physical…

Q: ABC Company would like to know which of the following statements is correct? a.In a merchandising…

A: Solution: When company is using perpetual inventory system, purchase discount given by supplier will…

Q: When the merchandise inventory account provides a running balance of the goods on hand, which…

A: The question is related to Inventory system. There are two methods of Inventory.Perpetual inventory…

Q: Which of the following items should be included in a company's inventory at the balance sheet date?…

A: Inventory is the current asset which is being held by the entity for the purpose of sale.

Q: In a retail business that uses a perpetual inventory system, scanning a bar code does not: O…

A: In a retail business that uses a perpetual inventory system, scanning a bar code does not: Option…

Q: Using a perpetual inventory system, the entry to record the sale of merchandise on account includes…

A: Perpetual inventory system: The method or system of maintaining, recording, and adjusting the…

Q: Under the perpetual inventory system, in addition to making the entry to record a sale, a company…

A: When sales will be made company has to increase cost of goods sold cost and has to reduce inventory…

Q: If the balance in the inventory account is greater than the physical count, which of the following…

A: When inventory is found to be greater than physical count , we need to increase inventory. For…

Q: Which of the following accounts would be included in the chart of accounts of a merchandising…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: ears in both the debit and the credit columns appears in the credit column only is correct as stated…

A: Merchandise inventory is the value of items in stock, whether they are finished goods or raw…

Q: The following are several items that Golosow Company's controller has questioned regarding their…

A: Inventory refers to the goods that are remaining unsold at the end of the accounting period. To…

Q: The journal entry to record the payment of freight cost under the perpetual inventory system is as…

A: Given transaction is: Payment of freight cost under the perpetual inventory system

Q: The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and…

A: Inventory: Inventory means to stock it may be raw materials, work-in-process or finished goods Goods…

Q: Match each definition with the term that best describes it. An income measure that includes gains…

A: Income statement: The income statement determines the net income of the business by subtracting the…

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is