When Merchandise Purchased on Account Is Returned Under the Perpetual

question 232

Multiple Choice

When merchandise purchased on account is returned under the perpetual inventory system, the buyer would debit

• A) Merchandise Inventory
• B) Purchases Returns and Allowances
• C) Accounts Payable
• D) Accounts Receivable

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Definitions:

Economic Resource

Assets or inputs that have the potential to contribute to the production of goods and services, providing economic benefit to businesses or individuals.

Asset

Resources owned or controlled by a business, projected to bring future economic benefits.

Measurement Alternative

An accounting option that allows entities to measure certain investments at cost, minus impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

Receivables

Debts owed to a company by customers or other parties arising from the sale of goods or services or loans given.