In a Periodic Inventory System, the Entry to Record the Taking

question 32

Multiple Choice

In a periodic inventory system, the entry to record the taking of a cash discount for the purchase of merchandise would include a:

• A)credit to Purchase Discounts
• B)credit to Inventory
• C)debit to Purchase Discounts
• D)credit to Purchase Returns and Allowances.

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Definitions:

Collecting Bank

Any bank, with the exception of the payor bank, that handles a check during the check collection process.

Check Collection Process

The procedure by which banks handle the transfer and clearing of checks from the payee's bank to the issuer's bank, ensuring payment.

Cashier Checks

A check issued by a bank, drawn on its own funds rather than that of a personal account. It is typically considered a secure form of payment.

Businesses Community

A group of companies and organizations operating within the same industry or geographic area, often sharing resources, information, and economic interests.