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Recording Purchases Using the Perpetual System

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Which type of inventory system continually updates the inventory account with each purchase and sale?

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1. Josh makes an inventory purchase for his company. It is worth $2,000, and he pays in cash. Based on this purchase, which account should be debited?

2. When an inventory purchase is paid for with cash, what account is credited?

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About This Quiz & Worksheet

This quiz and corresponding worksheet will help you gauge your knowledge of how to record purchases using the perpetual system. Topics you'll need to know to pass the quiz include understanding what the perpetual system is as well as knowing what inventory involves.

Quiz & Worksheet Goals

Use this printable worksheet and quiz to review these definitions:

  • System that keeps the inventory up-to-date constantly
  • Account to debit for cash inventory purchases
  • Account to credit when inventory purchases are made with cash
  • Entries made on the left side of accounts
  • Where at least two accounts are affected

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Interpreting information - verify you can read information regarding what inventory is and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about the characteristics of a debit
  • Defining key concepts - ensure that you can accurately define main phrases and terms, such as asset account and liability and equity accounts

Additional Learning

To learn more about if this is the way to go to keep track of your stock, review the corresponding lesson called Recording Purchases Using the Perpetual System. This lesson will help you:

  • Understand what the perpetual system is
  • Describe why every transaction affects two accounts
  • Identify the difference between a credit and debit
  • Explain how assets differ from liabilities
  • Appreciate how to record appropriate transactions
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