Using a Perpetual Inventory System, the Entry to Record the Return

question 141

Multiple Choice

Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

• A) debit to Cost of Merchandise Sold
• B) credit to Accounts Payable
• C) credit to Merchandise Inventory
• D) credit to Sales

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Definitions:

Accounting Equation

The foundational equation in accounting, articulated as Assets = Liabilities + Owner's Equity, representing the relationship between a company's resources and claims on those resources.

Profit

The financial gain calculated as the difference between revenue generated and expenses incurred by a business.

Assets and Liabilities

These represent a company's resources (assets) and obligations (liabilities).

Incoming Cash

Money received by an organization, representing inflows from various sources like sales, investments, or loans.