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:

Annual Rent Payments

Periodic payments made by a lessee to a lessor, often stipulated in a lease contract, to use a property for a specified term each year.

Insurance Premium

The amount paid periodically to an insurance company in exchange for coverage against specified risks.

Rental Revenue

Income received from leasing out properties or equipment to others.

Capital Lease

A lease agreement considered similar to a purchase of the leased asset, showing both an asset and a liability on the lessee's balance sheet.