{"id":199636,"date":"2025-03-12T07:51:05","date_gmt":"2025-03-12T07:51:05","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=199636"},"modified":"2025-03-12T07:51:08","modified_gmt":"2025-03-12T07:51:08","slug":"a-buyer-would-record-a-payment-within-the-discount-period-under-a-perpetual-inventory-system-by-crediting","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/12\/a-buyer-would-record-a-payment-within-the-discount-period-under-a-perpetual-inventory-system-by-crediting\/","title":{"rendered":"A buyer would record a payment within the discount period under a perpetual inventory system by crediting"},"content":{"rendered":"\n<p>A buyer would record a payment within the discount period under a perpetual inventory system by crediting<\/p>\n\n\n\n<p>a.Accounts Payable.<\/p>\n\n\n\n<p>b.Inventory.<\/p>\n\n\n\n<p>c.Purchase Discounts.<\/p>\n\n\n\n<p>d.Sales Discounts.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Correct Answer:<\/h3>\n\n\n\n<p><strong>c. Purchase Discounts.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p>In a <strong>perpetual inventory system<\/strong>, inventory records are updated continuously to reflect purchases and sales. When a buyer makes a purchase on credit, the inventory account is initially debited, and accounts payable is credited. If the buyer takes advantage of a discount for early payment (e.g., 2\/10, net 30), the discount amount is recorded separately.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Accounting Entries in the Perpetual Inventory System:<\/h3>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>At the time of purchase on credit:<\/strong><\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Debit<\/strong> Inventory (to record the purchase)<\/li>\n\n\n\n<li><strong>Credit<\/strong> Accounts Payable (to recognize the liability)<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>At the time of payment within the discount period:<\/strong><\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Debit<\/strong> Accounts Payable (for the full invoice amount)<\/li>\n\n\n\n<li><strong>Credit<\/strong> Cash (for the reduced amount paid)<\/li>\n\n\n\n<li><strong>Credit<\/strong> Purchase Discounts (to record the discount taken)<\/li>\n<\/ul>\n\n\n\n<p>The <strong>Purchase Discounts<\/strong> account is used to track reductions in cost due to early payment. It is a <strong>contra-expense account<\/strong> that reduces the cost of inventory, indirectly increasing gross profit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Why Not the Other Options?<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>a. Accounts Payable<\/strong> \u2013 This account is debited, not credited, when payment is made.<\/li>\n\n\n\n<li><strong>b. Inventory<\/strong> \u2013 Under the <strong>perpetual system<\/strong>, inventory is directly adjusted at purchase, and discounts are recorded separately rather than reducing inventory.<\/li>\n\n\n\n<li><strong>d. Sales Discounts<\/strong> \u2013 This applies to <strong>sellers<\/strong>, not buyers. Sellers offer discounts to encourage early payment, but buyers record them as purchase discounts.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion:<\/h3>\n\n\n\n<p>In a <strong>perpetual inventory system<\/strong>, when a payment is made within the discount period, the buyer credits <strong>Purchase Discounts<\/strong>, reflecting the cost savings due to early payment.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A buyer would record a payment within the discount period under a perpetual inventory system by crediting a.Accounts Payable. b.Inventory. c.Purchase Discounts. d.Sales Discounts. The correct answer and explanation is : Correct Answer: c. Purchase Discounts. Explanation: In a perpetual inventory system, inventory records are updated continuously to reflect purchases and sales. When a buyer [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-199636","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/199636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=199636"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/199636\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=199636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=199636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=199636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}