Question

Why is merchandise inventory credited when discount

Answer 1

To reduce the cost of the inventory.

Answer 2

Merchandise inventory is credited when a discount is applied because a discount decreases the value of inventory for a business.

Step-by-step explanation:

In accounting, merchandise inventory is credited when a discount is applied because a discount decreases the value of inventory for a business. When a company purchases inventory at a discounted price, the discount reduces the amount paid for the inventory. As a result, the inventory account is credited to decrease its value.