In a Periodic Inventory System, When a Company Returns Merchandise

question 83

Multiple Choice

In a periodic inventory system, when a company returns merchandise previously purchased on account, the entry to record the return would include a:

• A)debit to Inventory.
• B)credit to Purchase Returns and Allowances.
• C)debit to Sales Returns and Allowances.
• D)credit to Accounts Payable.

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Definitions:

Balance Sheet

A report detailing a company's assets, liabilities, and equity owned by shareholders at a certain moment.

Income Statement

A report detailing a company's financial activities, including income, outgoings, and net earnings or deficits, over a particular period of time.

Statement of Cash Flows

A financial statement that outlines the cash inflows and outflows from operating, investing, and financing activities, helping to assess a company's liquidity.

Accounts Receivable

The money owed to a company by its customers for products or services that have been delivered but not yet paid for.