Under the Perpetual Inventory System, Discounts Taken on an Invoice

question 97

Multiple Choice

Under the perpetual inventory system, discounts taken on an invoice by the buyer would be:

• A)debited to Merchandise Inventory.
• B)credited to Merchandise Inventory.
• C)debited to Cost of goods sold.
• D)credited to Cost of goods sold.

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Definitions:

Total Variable Costs

The sum of all costs that vary directly with the level of production or output, excluding fixed costs.

Total Costs

Total costs encompass the sum of all expenses incurred by a business in the production and sale of goods or services.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent or salaries.

Marginal Costs

The cost incurred by producing one additional unit of a product or service.