10 Questions
What is the primary function of a point-of-sale terminal in a perpetual inventory system?
To connect to the store's main computer for inventory tracking
How does the perpetual inventory system record the cost of inventory when an item is sold?
By debiting the COGS account and crediting the Merchandise Inventory account
What is the purpose of a sales invoice in a perpetual inventory system?
To provide terms and conditions of sale to the customer
How does the perpetual inventory system account for sales returns?
By debiting the Sales account and crediting the Accounts Receivable account
What is the difference between periodic and perpetual inventory systems?
Periodic inventory systems are used for tracking inventory levels at specific intervals, while perpetual inventory systems are used for tracking inventory levels in real-time
What is the effect of freight-in on the perpetual inventory system?
It increases the merchandise inventory account
What is the purpose of a delivery out in a perpetual inventory system?
To record the shipment of an item to a customer
How does the perpetual inventory system account for purchase returns?
By debiting the Accounts Payable account and crediting the Merchandise Inventory account
What is the purpose of a credit invoice in a perpetual inventory system?
To provide credit to a customer for a returned item
How does the perpetual inventory system record the cost of goods sold when an item is returned?
By debiting the COGS account and crediting the Merchandise Inventory account
Learn about the accounting procedures for a merchandising business, including the Freight-in account and its relation to inventory and cost of goods sold.
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