Final answer:
Purchase returns and allowances result in a reduction of the total purchases because they involve returning goods or receiving a discount due to issues with the sold products.
Step-by-step explanation:
Purchase returns and allowances are transactions where a buyer returns goods to the seller, or the seller provides a reduction in the purchase price to account for issues with the goods.
The correct answer to the question is that purchase returns and allowances decrease the amount of purchases.
This is because when goods are returned or allowances are made, the seller receives the product back or forfeits a portion of the sale revenue, thus reducing the total sales amount.