How Do Purchase Returns and Allowances and Purchase Discounts Affect

question 113

Multiple Choice

How do purchase returns and allowances and purchase discounts affect net purchases?

• A)Both are added to purchases.
• B)Both are subtracted from purchases.
• C)Purchase returns and allowances are added to purchases; purchase discounts are subtracted from purchases.
• D)Purchase returns and allowances are subtracted from purchases; purchase discounts are added to purchases.

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Definitions:

Stop-Payment Order

A request made to a bank by an account holder to not pay out on a check or transaction previously issued or authorized.

Liability

Legal responsibility for one's actions or inactions, particularly in causing harm to others or to property, which may result in civil or criminal penalties.

UCC

Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Traveler's Check

A preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of the payee's acceptance.