To Record a Return of Merchandise Purchased on Credit on the Books

question 94

Multiple Choice

To record a return of merchandise purchased on credit on the books of the buyer, the accountant would:

• A)debit Purchases and credit Purchases Returns and Allowances.
• B)debit Purchases Returns and Allowances and credit Accounts Receivable.
• C)debit Purchases Returns and Allowances and credit Purchases.
• D)debit Accounts Payable and credit Purchases Returns and Allowances.

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Definitions:

Predominant Factor Test

A legal doctrine used to classify a transaction within the framework of the Uniform Commercial Code (UCC) by determining the main purpose of the contract.

Liberally Administered

A principle or policy applied in a manner that is flexible, generous, or not strictly in accordance with strict rules or formalities.

Aggrieved Party

An individual or entity that has suffered legal wrong or harm, and who is entitled to bring a lawsuit against the party responsible for that harm.

Modified Contract

An agreement where the original terms have been altered or amended by the parties involved, following mutual consent.