3. Under the perpetual inventory method, assets increase when inventory is purch
ID: 2428001 • Letter: 3
Question
3. Under the perpetual inventory method,
assets increase when inventory is purchased on account.
ignoring the effects of revenue recognition, assets decrease when inventory is sold.
ignoring the effects of revenue recognition, equity increases when inventory is sold.
a and b.
a.assets increase when inventory is purchased on account.
b.ignoring the effects of revenue recognition, assets decrease when inventory is sold.
c.ignoring the effects of revenue recognition, equity increases when inventory is sold.
d.a and b.
Explanation / Answer
Under the perpetual inventory method, both assets increase when inventory is purchased on account and ignoring the effects of revenue recognition, assets decrease when inventory is sold.
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