MANAGEMENT

Detailed explanation-1: -Under a perpetual inventory system, when a company purchases goods for resale, purchases on account are debited to the Inventory account.

Detailed explanation-2: -In the periodic inventory system, purchases of merchandise for resale are debited to the Purchases account. debits to Sales, Purchases Returns and Allowances, and Purchases Discounts, Credits to the Allowance for Doubtful Accounts, and Adjustments to the merchandise inventory account to match physical inventory.

Detailed explanation-3: -Under the periodic inventory system, all purchases made between physical inventory counts are recorded in a purchases account. When a physical inventory count is done, the balance in the purchases account is then shifted into the inventory account, which in turn is adjusted to match the cost of the ending inventory.

Detailed explanation-4: -Under a perpetual inventory system, the acquisition of merchandise for resale is debited to purchases accounts.

Detailed explanation-5: -Companies may use either the perpetual system or the periodic system to account for inventory. Under the periodic system, merchandise purchases are recorded in the purchases account, and the inventory account balance is updated only at the end of each accounting period.