MANAGEMENT

Detailed explanation-1: -In a perpetual inventory system, software records changes into a sales revenue account each time the company makes a sale or purchases new inventory. This process of recording sales ensures that the accounting records reflect accurate balances in the accounts affected. The software also records the price charged.

Detailed explanation-2: -In what account are purchases recorded when the periodic inventory system is used? In a perpetual inventory system, purchases are recorded in the Merchandise Inventory account. In a periodic inventory system, purchases are recorded in the Purchases account.

Detailed explanation-3: -A perpetual inventory system is a system used to track and record stock levels, in which every purchase and sale of stock is logged automatically and immediately. In this system, every time a transaction takes place, the software records a change in inventory levels in real-time.

Detailed explanation-4: -Under the perpetual system, two transactions are recorded at the time that the merchandise is sold: (1) the amount of the sale is debited to Accounts Receivable or Cash and is credited to Sales, and (2) the cost of the merchandise sold is debited to the account Cost of Goods Sold and is credited to Inventory.