Under A Perpetual Inventory System, Assets Purchased For Resale Are Recorded In Which Of The Following Accounts?
Correct Answer: (B) Inventory Account The correct option of this multiple choice question (MCQ) is (B) Inventory Account . Under a Perpetual Inventory System , assets purchased for resale are recorded directly in the Inventory Account because they are considered merchandise held for sale to customers. Every purchase immediately increases inventory, allowing the business to maintain an up-to-date record of inventory available at any point in time. Unlike the Periodic Inventory System , where purchases are temporarily accumulated in a separate Purchases Account until the end of the accounting period, the perpetual system updates inventory continuously whenever goods are purchased, sold, returned, or adjusted. This real-time recording provides management with accurate inventory information, improves internal control, and supports better business decision-making. Why Is Inventory Account Used? The purpose of purchasing these assets is not to use them in business operations , but to...