A Company Uses the Perpetual Inventory System and Recorded the Following

question 155

Multiple Choice

A company uses the perpetual inventory system and recorded the following entry: $$\begin{array} { | l | r | r | } \hline \text { Accounts Payable } & 2,500 & \\\hline \text { Merchandise Inventory } & & 50 \\\hline \text { Cash } & & 2,450 \\\hline\end{array}$$ This entry reflects a:

• A) Return of merchandise.
• B) Payment of the account payable less a 1% cash discount taken.
• C) Payment of the account payable less a 2% cash discount taken.
• D) Sale of merchandise on credit.
• E) Purchase of merchandise on credit.

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Definitions:

Mechanic's Lien

A legal claim against a property by a contractor or repair person who has not been paid for work performed on that property.

Statute

is a formal written law enacted by a legislative body at the local, state, or federal level.

Perfected Secured Interest

A legal condition in which a creditor has established a priority claim on a debtor's collateral, making their claim stronger against third parties.

Unperfected Secured Interest

A security interest in collateral that has not been publicly filed or recorded, potentially making it subordinate to other claims.