A Company That Uses the Perpetual Inventory Method Purchases Inventory

question 123

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 20 days later?

• 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:

Saturation

In color theory, saturation denotes the intensity of color in an image or visual object; in marketing, it refers to the level of market penetration of a product, service, or message.

Trichromatic Theory

A theory of color vision that suggests our ability to perceive color is based on the response rates of three types of cones in the eye, each sensitive to different light wavelengths.

Color Vision

The capability of the visual system to distinguish objects based on the wavelengths of the light they reflect, emit, or transmit.

Cones

Photoreceptor cells in the retina of the eye responsible for color vision and functioning best under bright light conditions.