A Company Using a Perpetual Inventory System That Returns Goods

question 46

Multiple Choice

A company using a perpetual inventory system that returns goods purchased on credit would

• A)debit Accounts Payable and credit Inventory.
• B)debit Sales and credit Accounts Payable.
• C)debit Cash and credit Accounts Payable.
• D)debit Accounts Payable and credit Purchases.

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Definitions:

Financial Liabilities

Obligations that require a company to pay money to another entity, including loans, bonds payable, and accounts payable.

Borrowing Cost

A financial expense encompassing interest and other costs incurred by an entity in connection with the borrowing of funds.

Entity's Profits

The financial gain that remains after subtracting all expenses, taxes, and costs from a company's revenue.