If a Firm, Using a Perpetual Inventory System, Purchases Inventory

question 120

Multiple Choice

If a firm, using a perpetual inventory system, purchases inventory on credit, and later returns $200 of goods to the vendor, including GST, what entry would be made to record the return of goods to the vendor?

• A)$200 debit to Purchases and a $200 credit to Accounts payable
• B)$200 debit to Accounts payable and a $200 credit to Purchases
• C)$181.82 debit to Inventory, a $18.18 debit to GST Clearing and a $200 credit to Accounts payable
• D)$200 debit to Accounts payable, a $181.82 credit to Inventory and a $18.18 credit to GST Clearing

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Definitions:

Dominant Strategy

A strategy in game theory that is best for a player, regardless of the strategies chosen by the other players.

Maximum Profits

The highest amount of earnings achievable by a firm when marginal costs equal marginal revenue.

Cartel

A group of producers or vendors coming together to keep prices elevated and limit competition.

Perfectly Competitive

In a perfectly competitive market, numerous small firms sell identical products, and no single seller can influence the market price.