In a Perpetual Inventory System, the Amount of the Discount

question 98

Multiple Choice

In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to

• A) Merchandise Inventory.
• B) Purchase Discounts.
• C) Purchase Allowance.
• D) Sales Discounts.

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Definitions:

Warranty

A guarantee, typically from a manufacturer or seller, promising to repair or replace defective goods within a specified time period.

Lease Liability

A financial obligation representing the present value of future lease payments that a lessee is required to make under a lease agreement.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to present value future cash flows, or in the context of bond investments, it is the interest rate used by investors to compare different bond issues.

Capital Lease

A lease considered as a purchase of an asset, where the lessee records the leased asset as if it were owned.