In a Perpetual Inventory System That Uses the Gross Method

question 42

Multiple Choice

In a perpetual inventory system that uses the gross method which of the following is true?

• A)When a discount is taken the Purchase Discount account is credited.
• B)The Accounts Payable account is debited for the cash paid.
• C)The Inventory account is reduced when the discount is taken.
• D)The Purchase Discount Lost account is debited when the discount is not taken.

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Definitions:

Effective Rate of Return

A measure of the return on an investment that accounts for the effect of compounding over a specified time period.

Contributions

Payments or services provided by individuals or organizations to a common fund or project.

RRSP

Registered Retirement Savings Plan, a retirement savings and investing vehicle for employees and the self-employed in Canada that provides tax benefits.

Contributions

Payments or investments made into a scheme, plan, or project by individuals or entities.