46). Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller. a 47). Purchase returns refer to merchandise a buyer purchase but then returns to the seller. 48). Purchase allowances refer to merchandise a buyer acquires but then returns to the seller. 49). Purchase allowances refer to a price reduction (allowance) granted to a buyer of defective or unacceptable merchandise. 50). Under the perpetual inventory system, the cost of merchandise purchased is recorded in the Merchandise Inventory account 51). Credit terms of 2/10, n/30 imply that the seller offers the purchaser a 2% cash discount if the amount is paid within 10 days of the invoice date. Otherwise, the full amount is due in 30 days. 52). If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10 days and the discount period is 60 days. 53). The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination. 54). Operating expenses are classified into two categories: selling expenses and cost of goods sold. 55). A single-step income statement includes cost of goods sold as another expense and shows only one subtotal for total expenses. 56). A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items. II. Multiple Choice 1. The accounting cycle begins by recording in the form of journal entries is a-business transaction b-financial information C-corporate minute d-business contract