Ryland Company returns merchandise previously purchased on account. It had not yet been paid for. Ryland uses the perpetual inventory system. Which of the following answers reflects the effects of the purchase return on the financial statements?

Question

Quizplus · Accepted Answer

The purchase return will reduce Ryland's assets (inventory) and liabilities (accounts payable). It will not affect the income statement or the statement of cash flows.

Ryland Company Returns Merchandise Previously Purchased on Account