When Merchandise Is Returned Under the Perpetual Inventory System, the Buyer

question 75

Multiple Choice

When merchandise is returned under the perpetual inventory system, the buyer would credit

• A) Merchandise Inventory
• B) Purchases Returns and Allowances
• C) Accounts Payable
• D) Accounts Receivable

---

Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to products or cost objects, calculated before the production starts based on estimated costs.

Machine-Hours

A measure of the amount of time machines are operated in the production process.

Activity-Based Costing

A technique in accounting that allocates expenses to products or services according to the activities and resources utilized in their creation.

Overhead Cost

encompasses indirect expenses related to the production process, such as utilities, rent, and administrative costs.