Which of the following items does not result in an entry to the Inventory account under a...
Question:
Which of the following items does not result in an entry to the Inventory account under a perpetual system?
a. Payment of freight costs for goods shipped to a customer
b. A purchase of merchandise
c. A return of Inventory to the supplier
d. All of these result in an entry to the inventory account under a perpetual system.
e. Payment of freight costs for goods received from a supplier
Purchase Returns:
When goods are returned by the customer for various reasons like damaged goods or goods not meeting the required standards or specifications, they reduce the balance of purchases. Under the periodic inventory system, accounts payable is debited and purchase returns are credited.
Answer and Explanation: 1
Correct answer: Option a. Payment of freight costs for goods shipped to a customer.
Explanation:
The journal entry to record freight costs for goods shipped to a customer does not result in an entry to the Inventory account.
| Entry: | |
| b. Purchase of merchandise | Debit Inventory, Credit Accounts payable. |
| c. A return of Inventory to the supplier | Debit Accounts payable, Credit Inventory. |
| e. Payment of freight costs for goods received from a supplier | Debit Inventory, Credit Accounts payable. |
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Perpetual Inventory System: Definition, Advantages & Examples
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Chapter 1 / Lesson 15
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Learn about the perpetual inventory system and how it is used. Explore the advantages of perpetual inventory systems and compare perpetual vs. periodic inventory.
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