PRC-1 · Chapter 7 · Question 78 of 100
Under a perpetual inventory system, what is the correct double entry for recording a purchase return of goods previously bought on credit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Accounts Payable, Credit Inventory
Explanation
In a perpetual system, the Inventory account holds all acquisitions and must be directly reduced when goods are returned. Therefore, the supplier's liability is reduced (Debit Accounts Payable) and Inventory is reduced (Credit Inventory).
More IAS 2: Inventories MCQs
- Q80Under normal circumstances, raw materials are not written down below cost if the finished products they make will be sold at a profit…
- Q81An entity had opening inventory of 36,000 units @ Rs. 3.9 per unit. During the month, it purchased 41,000 units @ Rs. 4.5 per unit. Sales…
- Q82A business using a periodic inventory system suffered a loss of stock worth Rs. 100,000 due to fire. The insurance company agreed to…
- Q83Which of the following items is explicitly EXCLUDED from the scope of IAS 2 Inventories?
- Q84How is 'Carriage Inwards' (freight-in) properly treated in the financial statements?