A Merchandiser Purchases Inventory on Account Under a Perpetual Inventory

question 160

Multiple Choice

A merchandiser purchases inventory on account under a perpetual inventory system with terms of 2/10 n/30. The merchandiser would:

• A)credit Inventory on date of payment if the discount is taken.
• B)credit Inventory on date of payment if the discount is not taken.
• C)credit Purchases Discounts on date of purchase if the discount is taken.
• D)debit Purchases Discounts on date of purchase if the discount is not taken.

Understand the factors and components involved in calculating the loss on sale of a business component.

Differentiate between revenues and gains as well as understand the nuances and GAAP provisions regarding their distinction.

Identify elements included and excluded from the calculation of the cost of goods sold.

Grasp the conditions necessary for revenue recognition.

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Definitions:

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Membrane-bound cell organelles that produce most of the chemical energy needed to power the cell's biochemical reactions.

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A period spanning from the formation of Earth about 4.5 billion years ago to the first appearance of abundant, complex life approximately 541 million years ago.

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Intense and frequent attacks or hits, often used in the context of celestial bodies impacting a planet.