Regarding Markdowns, Which of the Following Statements Is TRUE

question 73

Multiple Choice

Regarding markdowns, which of the following statements is TRUE?

• A) The markdown ratio is calculated by dividing the sum of markdowns and allowances by net sales.
• B) Markdowns are required because customers will not buy at the original marked-up price.
• C) Markdowns are generally considered to be due to "business errors."
• D) All of these alternatives for markdowns are TRUE.

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Definitions:

General Journal

A primary accounting record used to keep track of all business transactions not recorded in specialized journals, using the double-entry accounting method.

Periodic Inventory System

An inventory system that updates inventory balances at specific intervals instead of continuously, often requiring a physical count.

General Journal

A primary accounting record where financial transactions are chronologically recorded before being posted to specific accounts in the general ledger.

Purchases Transactions

Activities related to buying goods and services for use or resale by a business.