Instructions: Designate the best answer for each of the following questions. A company returned goods for credit to the supplier. Which one of the following is a portion of the journal entry required if a perpetual inventory system is used? a. Credit Accounts Payable b. Credit Purchase Returns and Allowances C. Debit Accounts Receivable d. Credit Inventory 2. A company sells item on account with credit terms of 2/10, n/20. What is the meaning of these terms? a. An additional amount equal to 2 percent of the invoice price must be paid if payment is not received within 10 days; the account is overdue after 20 days. b. A 10 percent cash discount may be taken if payment is made immediately, a 2 percent discount if paid within 20 days. C. A 2 percent cash discount may be taken if payment is made within 10 days of the invoice date; otherwise the full amount is due within 20 days. d. A 10 percent cash discount may be taken if payment is made within 2 days of the invoice date; otherwise the full amount is due in 20 days. Which statement below is true concerning a perpetual inventory system? a. It allows for the determination of cost of goods sold after each sale. b. It requires a physical inventory count to determine the cost of goods on hand. C. Cost of goods sold is determined based on a physical count at the end of the period. d. It is used infrequently due to the high cost of determining the cost of goods acquired. An analyst calculated the quality of earnings ratio for a company and determined it to be 2.7. What does this measure indicate? a. The company may be using more aggressive accounting techniques in order to accelerate income recognition. b. The company's net income significantly exceeds its net cash provided by operating activities. C. The company is relatively profitable. d. The company's net cash provided by operating activities significantly exceeds its net income