BUISENESS MANAGEMENT
MERCHANDISING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Debit Merchandise Inventory $2, 850; credit Cash $2, 850.
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Debit Cash $2, 850; credit Accounts Payable $2, 850.
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Debit Accounts Payable $2, 850; credit Merchandise Inventory $57; credit Cash $2, 793.
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Debit Accounts Payable $3, 700; credit Cash $3, 700.
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Debit Accounts Payable $2, 850; credit Cash $2, 850.
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Detailed explanation-1: -Any purchases made with credit can be referred to as “purchased on account.” A business that owes another entity for goods or services rendered will record the total amount as a credit entry to increase accounts payable. The outstanding balance remains until cash is paid, in full, to the entity owed.
Detailed explanation-2: -What type of account is merchandise inventory? Merchandise inventory is an asset account. Merchandise inventory is reported as a current asset on a retailer’s balance sheet. A current asset is one that will provide an economic benefit during a given accounting period, typically a year.
Detailed explanation-3: -In a perpetual system, you record purchases in the raw materials inventory account or the merchandise account.
Detailed explanation-4: -A buyer will receive a 2% discount on the net amount if they pay the invoice in full within the first ten days of the invoice date. Otherwise, the full invoice amount is due in 30 days without a discount.