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:

Merger

The combining of two or more entities into one, through either the acquisition of one by another or the consolidation of both into a new entity.

Building Corporation

A company engaged in the construction of buildings, ranging from residential to commercial projects.

Business Judgment Rule

A principle that protects corporate directors and officers from liability for decisions made in good faith and believed to be in the best interest of the company.

Takeover Attempt

An effort by one company or entity to acquire control over another, often involving the purchase of a significant share of the target company's stock.