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Discuss how discounts are recorded in a perpetual inventory system, and compare how discounts are recorded in a periodic inventory system.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter11: Work Sheet And Adjusting Entries

Section: Chapter Questions

Problem 6DQ: Why is it necessary to adjust the Merchandise Inventory account under a periodic inventory system?

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Under the perpetual inventory system, how does the seller record sales made on account?
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