If Merchandise Purchased on Credit Is Returned to the Seller

question 44

Multiple Choice

If merchandise purchased on credit is returned to the seller for a full refund,what would be the effect on the accounts listed below?

• A)Increase Inventory;No effect on Cost of Goods Sold;Decrease Accounts Payable.
• B)Decrease Inventory;Decrease Cost of Goods Sold;No effect on Accounts Payable.
• C)No effect on Inventory;Decrease Cost of Goods Sold;Decrease Accounts Payable.
• D)Decrease Inventory;No effect on Cost of Goods Sold;Decrease Accounts Payable.

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Definitions:

Sales Journal

A specialized accounting journal used to record all sales made by a business on credit.

Sales Journal

A specialized accounting journal used to record all sales of merchandise on credit.

Cash Sales

Cash sales are transactions where payment is made immediately in cash or through electronic means at the time of purchase, without extending credit.

Credit Sales

Sales made by a business where payment is delayed, as opposed to cash sales where payment is immediate.