Which of the following statements about a periodic inventory system is true? Group of answer choices Under the periodic inventory system purchases of inventory are typically credited to the Purchases account. Available discounts taken by the customer for early payment of an invoice are termed discount received by the seller. Freight-in is an account that is subtracted from the Purchases account to arrive at the net cost of goods purchased. Under the periodic inventory system, allowances granted by the supplier to the merchandiser are credited to the Purchases Returns and Allowances account.

The statement that is true about a periodic inventory system is:

"Under the periodic inventory system purchases of inventory are typically credited to the Purchases account."

Explanation:

In a periodic inventory system, all purchases made during the accounting period are recorded in the Purchases account. At the end of the accounting period, the Purchases account is closed and its balance is transferred to the Inventory account. This system does not track each individual item in the inventory, but rather provides a periodic update of the total value of the inventory.

The other statements are not accurate:

• Discounts taken by the customer for early payment are termed "sales discounts" by the seller, not "discount received".
• Freight-in is an account that is added to the Purchases account to arrive at the cost of goods purchased, not subtracted.
• Under the periodic inventory system, allowances granted by the supplier to the merchandiser are debited (not credited) to the Purchases Returns and Allowances account. This reduces the cost of purchases.

The correct answer is:

Under the periodic inventory system, allowances granted by the supplier to the merchandiser are credited to the Purchases Returns and Allowances account.

Here's why:

1. Under the periodic inventory system, purchases of inventory are typically debited (not credited) to the Purchases account. This is because purchases increase the value of the inventory, which is an asset, and increases in assets are recorded as debits.

2. Available discounts taken by the customer for early payment of an invoice are termed discount received by the buyer (not the seller). The seller is the one who offers the discount, not the one who receives it.

3. Freight-in is an account that is added (not subtracted) to the Purchases account to arrive at the net cost of goods purchased. This is because freight-in represents the cost of transporting the goods to the buyer, which is part of the total cost of the goods.

4. Under the periodic inventory system, allowances granted by the supplier to the merchandiser are indeed credited to the Purchases Returns and Allowances account. This is because allowances reduce the cost of the goods purchased, and reductions in expenses are recorded as credits.