Assuming That the Net Price Method of Recording Purchases Is

question 39

Multiple Choice

Assuming that the net price method of recording purchases is used and that the business uses the perpetual method of inventory recording, the correct entry to record the purchase of goods for $5000 on credit, with terms of 2/10, n/30 is: (ignore GST) .

• A) DR Inventory $5000; CR Accounts payable $5000
• B) DR Inventory $4900; CR Accounts payable $4900
• C) DR Inventory $4900; DR Discount allowed $100: CR Accounts payable $5000
• D) DR Purchases $5000; CR Accounts payable $4900; CR Discount allowed $100

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Definitions:

Operation Indicated

The specific procedure or set of procedures designated by particular signs in an equation or formula.

Collect Like Terms

In algebra, the process of combining terms that have the same variables raised to the same power into a single term.

Operation Indicated

Definition: The specific arithmetic operation (such as addition, subtraction, multiplication, division) suggested or required by a problem or equation.

Simplify

To make something easier to understand or apply by reducing complexity.