On April 1, a hardware retailer purchases inventory on account for $900.

Which of the following correctly describes the effect of this transaction? Assume a perpetual inventory system is used.

A.Merchandise Inventory increases by

$900

and Accounts Payable decreases by

$900.

B.Merchandise Inventory increases by

$900

and Accounts Payable increases by

$900.

C.Merchandise Inventory decreases by

$900

and Accounts Receivable decreases by

$900.

D.Merchandise Inventory decreases by

$900

and Accounts Receivable increases by

$900.