Purchases, returns and allowances should be added to the cost of purchases on the income statement, assuming the periodic inventory system is used.

Name: Purchases, returns and allowances should be added to the cost of purchases on the income statement, assuming the periodic inventory system is used.
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Purchases are added to the cost of purchases, but returns and allowances are subtracted from the cost of purchases on the income statement under the periodic inventory system.

Purchases, Returns and Allowances Should Be Added to the Cost