A company pays an invoice early and takes 4% off of the original invoice price. The account to be credited for the discount under a perpetual inventory system is:

Question

Quizplus · Accepted Answer

Under a perpetual inventory system, when a company takes a discount for early payment, the inventory account is credited to reflect the reduced cost of the inventory purchased. This adjustment ensures that the inventory is recorded at its correct cost.

A Company Pays an Invoice Early and Takes 4% Off