Best Value Furniture Uses the Periodic Inventory System to Account

question 88

Multiple Choice

Best Value Furniture uses the periodic inventory system to account for its inventory.It purchased $2,000 of goods from its supplier but later returned $400 of the goods due to damage.Best Value would record the return by:

• A) debiting Accounts Payable,crediting Purchases
• B) debiting Sales Returns and Allowances,crediting Accounts Receivable
• C) debiting Accounts Payable,crediting Purchases Purchase Returns and Allowances
• D) debiting Purchase Returns and Allowances,crediting Accounts Payable

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Definitions:

Financial Information

Data relating to the financial performance, position, and cash flows of a business, which is used by stakeholders to make economic decisions.

Return on Total Assets

A profitability ratio that measures net income produced by total assets within a period.

Financial Information

Data that pertains to the financial status, performance, and changes in financial condition of an entity.

Days' Sales Uncollected

A measure of how quickly a company converts its accounts receivable into cash, indicating the average number of days sales remain uncollected.