The Entry to Record a Purchase of $12,000 in Merchandise

question 85

Multiple Choice

The entry to record a purchase of $12,000 in merchandise assuming terms of 2/10,n/30 and a periodic inventory system would include a(n)

• A)increase to Accounts Payable for $12,000.
• B)increase to Purchases Discounts for $240.
• C)decrease to Purchases for $12,000.
• D)decrease to Accounts Payable for $11,760.

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Definitions:

Cost of Goods Sold

The expenses directly related to the manufacturing of products a company sells, which includes the cost of materials and labor.

Gross Profit

The difference between revenue and the cost of goods sold, indicating how efficiently a company produces goods.

Operating Expenses

Costs associated with a company's main operational activities, excluding direct materials, direct labor, and other direct costs, such as rent, utilities, and salaries.

Gross Profit

A financial measurement obtained by deducting the cost of goods sold from the overall sales revenue.