Assume That the Net Price Method of Recording Purchases Is

question 34

Multiple Choice

Assume that the net price method of recording purchases is used and the business uses the perpetual method of inventory recording. Record the purchase of goods for $5000 on credit, on terms of 3/10, n/30. Ignore GST.

• A) Debit inventory $5000; credit accounts payable $5000
• B) Debit inventory $4850; debit discount allowed $150: credit accounts payable $5000
• C) Debit inventory $4850; credit accounts payable $4850
• D) Debit purchases $5000; credit accounts payable $4850; credit discount allowed $150

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Definitions:

Regression

In psychology, a defense mechanism leading an individual to revert to an earlier stage of development in response to stress or conflict; in statistics, a method to determine the relationship between variables.

Projection

A defense mechanism where individuals attribute their unwanted feelings, impulses, or thoughts onto someone else.

Denial

A defense mechanism in which confrontation with a personal problem or with reality is avoided by denying the existence of the problem or reality.

Displacement

In psychology, displacement is a defense mechanism where a person redirects a negative emotion from its original source to a safer, substitute target.