Question

When goods are sold under the perpetual inventory system, the cost of the good sold is transferred from the ______ account to the ______ account.

Multiple choice .
a. cost of goods sold; inventory
b. inventory; cost of goods sold
c. inventory; cost of goods available for sale
d. cost of goods available for sale; inventory

Answer 1

The answer is option b, from the inventory account to the cost of goods sold account, recording each sale and its associated costs immediately in a perpetual inventory system.

Step-by-step explanation:

The correct answer to the question 'When goods are sold under the perpetual inventory system, the cost of the good sold is transferred from the ………… account to the ………… account' is option b. inventory; cost of goods sold. In a perpetual inventory system, each sale of goods triggers an immediate recording to account for the inventory leaving the business and the cost associated with those goods. This process involves transferring the cost from the Inventory account, which tracks the value of the goods on hand, to the Cost of Goods Sold (COGS) account, which represents the direct costs attributable to the goods that have been sold.