Assume That a Company Uses a Perpetual Inventory System and Records

Multiple Choice

Assume that a company uses a perpetual inventory system and records the return of inventory previously purchased on account with a debit to Accounts Payable and a credit to Inventory.This entry is:

A) incorrect and will cause assets to be overstated.
B) incorrect and will cause assets to be understated.
C) incorrect and will cause liabilities to overstated.
D) correct.