PRC-1 · Chapter 7 · Question 60 of 100
A company uses a perpetual inventory system. Which TWO journal entries are simultaneously required to record a credit sales transaction?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Receivables & Credit Sales; Debit Cost of Sales & Credit Inventory
Explanation
A perpetual system requires continuous updates to the inventory account. Therefore, alongside recording the revenue (Debit Receivables, Credit Sales), the removal of the goods is recorded immediately (Debit Cost of Sales, Credit Inventory).
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