MANAGEMENT

Detailed explanation-1: -When a sale occurs under perpetual inventory systems, two entries are required: one to recognize the sale, and the other to recognize the cost of sale. For the cost of sale, Merchandise Inventory and Cost of Goods Sold are updated. Under periodic inventory systems, this cost of sale entry does not exist.

Detailed explanation-2: -It is false that in a perpetual inventory system, when merchandise is purchased, it is debited to an account called purchases. The purchase journal is used in the periodic inventory system to help determine the value of ending inventory and the cost of goods sold.

Detailed explanation-3: -true. A perpetual inventory system is an effective means of control over inventory. true. Safeguarding inventory and proper reporting of the inventory in the books are the reasons for controlling the inventory.

Detailed explanation-4: -The perpetual inventory system requires recording the cost of each sales as it occurs. The two main systems for accounting for merchandise are periodic and perpetual. The purchase of equipment not for resale should be debited to the purchases account.