What Is the Net Method of Recording Purchases

question 189

Multiple Choice

What is the net method of recording purchases?

• A)A purchase is originally recorded at its full amount with any cash discount taken recorded as a reduction to inventory at a later date.
• B)A purchase is originally recorded at its full amount less any available cash discount.
• C)A purchase is originally recorded at its full amount plus any available cash discount.
• D)A purchase is originally recorded at its full amount with any cash discount taken recorded as an increase to inventory at a later date.
• E)A purchase is originally recorded to a purchase discounts lost account with any cash discount taken recorded as a reduction to inventory at a later date.

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Definitions:

Customer Refunds Payable

A liability account for estimated refunds and allowances that will be paid or granted to customers in the future.

Estimated Returns Inventory

A current asset account for the estimated amount of merchandise that will be returned by customers.

Customer Refunds Payable

Liabilities owed to customers for products or services that were sold but later returned or found unacceptable.

Perpetual Inventory

An inventory tracking system that records the sale or purchase of inventory immediately through the use of computerized systems.