Question

To what account if net purchases is closed?

Answer 1

(A) Income summary

(B) Costs of goods sold

(C) Inventory

(D) It’s not closed, it is a balance sheet account

Answer (C): Inventory

Explanation: The inventory should be refreshed to mirror the completion balance close by. The periodic framework brought about a debit to purchases or buys, and not stock. Further, as the merchandise is sold, no entry is made to lessen stock.

Also see: Inventory Turnover Ratio