When a Perpetual Inventory System Is Used, the Purchases Returns

question 10

True/False

When a perpetual inventory system is used, the purchases returns and allowances account will not be part of the general ledger accounts.

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Definitions:

Accounts Receivable

Outstanding payments from customers to a firm for delivered goods or services awaiting settlement.

Adjusting Entry

An accounting record made at the conclusion of a financial period to distribute revenue and expenses to the correct period of their occurrence.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account.

Income Statements

A financial report summarizing a company's revenues, expenses, and profits over a specified period.