A Purchase on Account with an Invoice Price of $1,500

question 92

Multiple Choice

A purchase on account with an invoice price of $1,500 has been made.The entry to record the payment after the 2 percent discount period would include a(n)

• A)decrease to Accounts Payable for $1,500.
• B)decrease to Purchases Discounts for $30.
• C)increase to Accounts Payable for $1,470.
• D)decrease to Cash for $1,470.

---

Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product and included in its cost.

Conversion Costs

Expenditures associated with transforming raw materials into final products, often comprising direct labor costs and indirect manufacturing expenses.

Equivalent Units

A concept used in process costing that converts partially completed units into an equivalent number of fully completed units to accurately measure inventory and cost of goods sold.

Weighted-Average Method

A method of costing inventory that determines the cost of goods sold and the closing inventory by averaging the cost of all items available for sale throughout the period.