Question

Under perpetual inventory system, in addition to making the entry to record a sale, an entity would

Answer 1

Answer:

record a decrease in inventory and an increase in cost of goods sold for the cost of the merchandise sold.

Explanation:

The perpetual inventory system maintains records of inventory movement and changes at the time of an inventory transaction, purchase, sale, or return using the inventory and cost of goods sold accounts instead of purchases account used under the periodic inventory system.  An inventory purchase increases the value of inventory while a sale reduces it, and adjustments are made for returns.  When goods are purchased or returned by customers, the inventory account is debited.  When goods are returned to suppliers or sold, the account is credited.