Q5-25RQ - Horngren'S Financial And Managerial Accounting

Question

What account is debited when recording a purchase of inventory when using a periodic inventory system?

Step-by-Step Solution

Answer

The purchase account is debited when recording a purchase of inventory while using a periodic inventory system.

Meaning of Periodic Inventory System

A periodic inventory system refers to the system in which an inventory account is updated at the end of an accounting period. It facilitates the business entities to track their opening and closing inventory balances.

Recording of inventory purchases under a periodic inventory system

When inventory is purchased under the periodic inventory system, the purchase account is debited to record such a transaction. 

Journal entry to record the purchase of inventory is as follows:

Date	Accounts and Explanation	Debit ($)	Credit ($)
	Purchases	XXX
	Cash/Accounts payable		XXX
	(To record the purchase of inventory)