Question

what is the effect of the purchase of $36,000 of merchandise on account using the perpetual inventory system:

a) increase in sales and increase in accounts receivable

b) increase in merchandise inventory and decrease in cash

c)increase in merchandise inventory and increase in accounts payable

d)decrease in sales and increase in merchandise inventory

Answer 1

Correct answer is: c) increase in merchandise inventory and increase in accounts payable

Purchase of $36000 of merchandise inventory on account means $36000 debited to merchandise inventory account which makes increase in merchandise inventory and $36000 credited to accounts payable account which increases accounts payable balance