Assume That a Perpetual Inventory System Is in Use

question 72

Multiple Choice

Assume that a perpetual inventory system is in use.Which of the following statements regarding the journal entries prepared is correct?

• A) "Freight-out" or delivery costs associated with sales should be included in Cost of Goods Sold.
• B) When a company receives payment from a customer for a sale, Cash is debited and Accounts Payable is credited.
• C) When a company grants an allowance to a customer, Inventory is credited when using a perpetual inventory system.
• D) When a customer returns inventory, the seller debits Sales Returns & Allowances under a perpetual inventory system.

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Definitions:

Individuals

Refers to the subjects or entities being studied in a statistical or research context.

Mutually Exclusive Events

Two or more events that cannot occur at the same time in any given experiment or real-world situation.

Intersection

The point or set of points where two or more geometric figures, lines, or paths cross each other.

Subjective Method

A method of assigning probabilities on the basis of judgment.