Question

Which of the following would be found on the credit side of the Inventory T-account? (Select all that apply.)

a. Purchase discounts
b. Purchases
c. Freight-out
d. Beginning balance
e. Purchase returns
f. Freight-in

Answer 1

The credit side of an Inventory T-account includes entries that reduce inventory levels. Purchase discounts and purchase returns are the correct options that would be found on the credit side, as both lower the total inventory.

Step-by-step explanation:

In the context of inventory management within accounting, the credit side of an Inventory T-account typically records events that decrease total inventory. From the options provided:

• a. Purchase discounts can be found on the credit side as it effectively reduces the cost of purchased inventory.
• e. Purchase returns will also be on the credit side because when a company returns goods, the total inventory decreases.

On the other hand:

• b. Purchases would generally be on the debit side, as this represents an increase in inventory.
• c. Freight-out is a selling expense and not recorded in the Inventory account.
• d. The beginning balance of inventory is not typically a credit entry, as it represents the initial quantity or value of inventory recorded at the start of the period.
• f. Freight-in is associated with the cost of purchasing inventory, which would usually be a debit to the Inventory account as it increases inventory cost.