Return of Inventory to Vendor: Account Impacted | CFA Level 1 Exam Prep

Return of Inventory to Vendor

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The following account is affected when recording a return of inventory to the vendor under a perpetual inventory system:

A. merchandise inventory

B. cash

C. accounts receivable

D. purchase returns and allowances

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A. B. C. D.

When inventory is purchased, Merchandise Inventory is debited, and credited when returned. The periodic system records purchases in an account called

Purchases and returns are booked to Purchases Returns and Allowances.

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