Task Team of FUNdaMENTAL aCCOUNtIng School of Business. Sun Yat-sen University B. The system does not include an up-to-date inventory ledger C. The balance in the Inventory account remains unchanged until the end of the period D. The Cost of Goods Sold account is updated as sales transactions occur 16. Green Co records purchases net of all available purchase discounts. If the company makes payment after the discount has expired, the entry to record the payment should include a A Debit to purchase discounts lost B. Credit to Purchase Discounts lost C. Debit to sales discounts D. Credit to sales discounts 17. Ward Company discovered that merchandise purchased on account was defective and returned this merchandise to the supplier. The entry to record this return will reduce Wards A Sales revenue and the cost of goods sold. B. Inventory and liabilities C. Inventory and cost of goods sold D. Sales revenue and liabilities 18. The term net sales refers to total sales less A Sales discounts, and less sales returns and allowances C Purchase returns, and less purchase discounts 19. The Sales Returns and Allowances account is debited when A. Merchandise is returned to a supplier B. Merchandise is returned by a customer C. Payment is made to a supplier within the discount period D. An account receivable is collected within the discount period 20. If sales discounts are shown as a separate item in financial statements, they should be shown A Deduction from accounts receivable B. Deduction from gross sales re C. Operating D Current liability 21. All of the following accounts normally have debit balances except B. Cost of goods sold C Sales returns allowances D. All of the above accounts normally have debit balances 22. The basic purpose of offering customers cash discounts such as 2/10, n/30 is toTask Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University 4 B. The system does not include an up-to-date inventory ledger. C. The balance in the Inventory account remains unchanged until the end of the period. D. The Cost of Goods Sold account is updated as sales transactions occur. 16. Green Co. records purchases net of all available purchase discounts. If the company makes payment after the discount has expired, the entry to record the payment should include a: A. Debit to Purchase Discounts Lost. B. Credit to Purchase Discounts Lost. C. Debit to Sales Discounts. D. Credit to Sales Discounts. 17. Ward Company discovered that merchandise purchased on account was defective and returned this merchandise to the supplier. The entry to record this return will reduce Ward’s: A. Sales revenue and the cost of goods sold. B. Inventory and liabilities. C. Inventory and cost of goods sold. D. Sales revenue and liabilities. 18. The term net sales refers to total sales less: A. Sales discounts, and less sales returns and allowances. B. Cost of goods sold. C. Purchase returns, and less purchase discounts. D. 2%. 19. The Sales Returns and Allowances account is debited when: A. Merchandise is returned to a supplier. B. Merchandise is returned by a customer. C. Payment is made to a supplier within the discount period. D. An account receivable is collected within the discount period. 20. If sales discounts are shown as a separate item in financial statements, they should be shown as a(n): A. Deduction from accounts receivable. B. Deduction from gross sales revenue. C. Operating expense. D. Current liability. 21. All of the following accounts normally have debit balances except: A. Transportation-in. B. Cost of goods sold. C. Sales returns & allowances. D. All of the above accounts normally have debit balances. 22. The basic purpose of offering customers cash discounts such as 2/10, n/30 is to: