Under a Periodic Inventory System, the Entry to Record the Return

question 88

Multiple Choice

Under a periodic inventory system, the entry to record the return of inventory sold on account for $250 with a cost of $185 would be recorded by the seller as a:

• A)credit to Accounts Receivable for $250.
• B)debit to Sales Returns and Allowances for $185.
• C)credit to Sales Revenue for $250.
• D)credit to Cost of Goods Sold for $185.

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Definitions:

Financial System

An intricate network of financial institutions, markets, and instruments that facilitate the exchange of funds and allocation of resources in an economy.

Business Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns, typically into companies or projects.

Debt Financing

The method of raising capital through the sale of bonds, bills, or notes to individuals or institutional investors which must be repaid at a later date.

Equity Financing

The process of raising capital through the sale of shares in a company.