A Company Using the Perpetual Inventory System Purchased Inventory Worth

question 103

Multiple Choice

A company using the perpetual inventory system purchased inventory worth $550,000 on account with credit terms of 2/15,n/45.Defective inventory of $70,000 was returned 3 days later,and the accounts were appropriately adjusted.If the company paid the invoice 25 days later,the journal entry to record the payment would be ________.

• A)$550,000 debit to Accounts Payable and $550,000 credit to Cash
• B)$480,000 debit to Accounts Payable and $480,000 credit to Cash
• C)$550,000 debit to Accounts Payable,$540,400 credit to Cash,and $9,600 credit to Merchandise Inventory
• D)$540,400 debit to Accounts Payable,$9,600 credit to Merchandise Inventory,and $480,000 credit to Cash

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Definitions:

Portfolio Beta

A measurement of the volatility of a portfolio compared to the market as a whole.

Risk-free Asset

An investment with a guaranteed return and no risk of loss, often represented by government bonds.

Beta

An evaluation of the consistent risk or volatility of a security or a portfolio relative to the overall market.

Portfolio Beta

A measure of the overall risk of a portfolio of investments, comparative to the market as a whole.