A Company That Uses the Perpetual Inventory Method Purchases Inventory

question 129

Multiple Choice

A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10,n/30.Which of the following entries would be made to record the payment if it is made within 10 days?

• A) $1,000 debit to Accounts payable and a $1,000 credit to Cash
• B) $1,000 debit to Accounts payable, a $20 credit to Inventory and a $980 credit to Cash
• C) $20 debit to Inventory, a $1,000 debit to Accounts payable and a $1,020 credit to Cash
• D) $980 debit to Accounts payable, a $20 debit to Inventory and a $1,000 credit to Cash

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Definitions:

Accounted Variance

The portion of the total variance in a set of data that is explained by a statistical model or variable.

Correlation

A statistical measure that indicates the extent to which two variables fluctuate together, showing whether and how strongly pairs of variables are related.

Variance Accounted

The proportion of total variation in a dataset that is explained by a statistical model.

Correlation

A statistical measure that expresses the extent to which two variables change together; indicating the strength and direction of a relationship.