If a Buyer Agrees to Retain Merchandise That Is Defective

question 50

Multiple Choice

If a buyer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a purchase

• A) discount.
• B) return.
• C) contra asset.
• D) allowance.

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Definitions:

Net Purchases

The total amount of purchases made by a business after subtracting returns, allowances, and discounts.

Net Purchases

Net Purchases refers to the total amount of purchases made by a company after subtracting any returns, allowances, and discounts received.

Ending Inventory

is the total value of goods available for sale at the end of an accounting period after accounting for all additions and subtractions during the period.

Operating Expenses

Expenses incurred during the normal functioning of a business, excluding the cost of goods sold; these can include salaries, rent, utilities, and marketing expenses.