The Journal Entry by the Buyer to Record a Return

question 118

Multiple Choice

The journal entry by the buyer to record a return of merchandise purchased on account under a perpetual inventory system would credit

• A)Accounts Payable.
• B)Purchase Returns and Allowances.
• C)Sales.
• D)Merchandise Inventory.

Distinguish between the normal balance sides of different accounts and correctly classify them as debit or credit side balances.

Understand basic journal entries for common stock issuance and direct investments in a business.

Set up and utilize T accounts for common transactions and prepare a trial balance.

Identify and correct common journalizing and posting errors.

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Definitions:

Accounting

A system that collects and processes (Analyzes, measures, and records) financial information about an organization and reports that information to decision makers.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financial activities.

Operating Activities

Activities that are part of a company's primary operations, including production, sales, and day-to-day business functions.

Indirect Method

A financial reporting approach used to generate the statement of cash flows, where net income is adjusted for changes in non-cash accounts to reveal cash generated or consumed by operating activities.