Question

Identify the accounts that are added to or deducted from Purchases in a periodic system todetermine the cost of goods purchased. For each account, indicate whether it is added or deducted. (A)Purchase Returned and Allowance – Deducted(B) Purchase Discounts – Deducted (C) Freight – in – Added

Answer 1

Answer and Explanation:

A)Purchase Returned and

Allowance – Deducted

(B) Purchase Discounts – Deducted (C) Freight – in – Added

The cost of goods purchased is the net cost of merchandise purchased. The calculate cost of goods purchased, we add freight to the initial purchase cost and then subtract Purchase returns and allowances and Purchase discounts. Cost of goods purchased is set against gross sales to determine profit.