To Calculate the Total Cost of a Merchandise Purchase,the Invoice

question 99

Multiple Choice

To calculate the total cost of a merchandise purchase,the invoice account must be adjusted for which of the following?

• A) Any discounts given to a purchaser by a supplier.
• B) Any returns and allowances received from a supplier.
• C) Any freight costs paid by a purchaser.
• D) Any taxes or other costs necessary to make the goods ready for sale.
• E) All of these answers are correct.

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Definitions:

Expensed

Describes costs that are charged against income in the period they are incurred, rather than being capitalized.

Normal Return

The expected return on an investment under normal conditions, considering historical averages and market conditions.

Excess Earnings

Profits that exceed the normal expected return on investment or capital for a business operation or asset.

Fair Value

The estimated price at which an asset or liability could be bought or sold in an orderly transaction between market participants.