Using a Perpetual Inventory System, the Entry to Record the Return

question 183

Multiple Choice

Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a

• A) credit to Sales Returns and Allowances
• B) debit to Merchandise Inventory
• C) credit to Merchandise Inventory
• D) debit to Cost of Merchandise Sold

---

Definitions:

Agency Agreement

A contract creating a fiduciary relationship whereby the first party consents that the actions of a second party bind them in relations with a third party.

Principal

The main party to a transaction or contract who has authorized an agent to act on their behalf.

Apparent Agency

A legal concept where a person appears to be, or is mistakenly believed to be, authorized to act as an agent for another party.

Agency by Estoppel

A principle by which a person or entity is prevented from denying the authority of another who has been allowed to act as their agent, despite not officially having been granted the role.