Purchases Recording

the recording of purchases and cash payments for a merchandising company. New accounts that will be introduced are purchase returns and allowances and purchase discounts. The purchases, returns and allowances account is used to record a decrease to a buyer’s cost and the purchase discount is used to lower the cost of a purchase. Another important concept to understand is freight charges. You will need to understand how to account for freight charges and how ownership passes from the buyer to the seller based on freight agreements.

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