Using the Perpetual Inventory System, Discounts Taken on an Invoice

question 16

Multiple Choice

Using the perpetual inventory system, discounts taken on an invoice, such as 3/10, n/30, would be:

• A)debited to Inventory.
• B)debited to Cost of sales.
• C)credited to Inventory.
• D)credited to Cost of sales.

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Definitions:

Non-Rational Escalation

The phenomenon of continuing a course of action even when it is not in one's best interest, disregarding rational analysis.

Ego

The part of the psyche that mediates between the conscious and the unconscious and is responsible for reality testing and a sense of personal identity.

Face Saving

Actions or strategies designed to preserve one's reputation or respect in the face of potential embarrassment or shame.

Overconfident

Having an excessively high opinion of one's abilities, performance, or situation, often without adequate justification.