Abbott Company purchased $6,500 of merchandise inventory on account. Abbott uses the perpetual inventory method. How does this transaction affect the financial statements? Multiple Choice Decrease accounts payable and decrease purchases Increase inventory and increase accounts payable Increase cost of goods sold and increase accounts payable Decrease accounts payable and decrease inventory

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26-06-2022
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Abbott Company purchased $6,500 of merchandise inventory on account. Abbott uses the perpetual inventory method. How does this transaction affect the financial statements? Multiple Choice Decrease accounts payable and decrease purchases Increase inventory and increase accounts payable Increase cost of goods sold and increase accounts payable Decrease accounts payable and decrease inventory

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vtalishathapar vtalishathapar · Answer 1 · 2022-06-28T09:16:15+02:00

The correct option is B which means through this transaction there is an increase in the stock or inventory and an increase in accounts payable also.

What is a Perpetual Inventory Method?

Perpetual Inventory Method is a method of inventory valuation that records the transaction at the time when it occurs. A perpetual inventory system will record changes in inventory at the time the transaction occurs.

Thus, the value of inventory is increased by $6,500 along with that accounts payable are increased by such $6,500.

Learn more about Perpetual Inventory here:

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