Which statement best describes the difference between purchase returns and purchase allowances?

• A. Purchase returns increase inventory and accounts payable, while purchase allowances decrease inventory and accounts payable.
• B. Purchase returns increase inventory and accounts payable, while purchase allowances increase inventory value but keep the goods.
• C. Purchase returns decrease inventory and accounts payable, while purchase allowances decrease inventory value but keep the goods.
• D. Purchase returns decrease inventory and accounts payable, while purchase allowances increase inventory and accounts payable.

Answer: (C)