When the Net Price Method Is Used to Record Credit

question 59

Multiple Choice

When the net price method is used to record credit sales, the sales discounts not taken account is reported as a(n)

• A)addition to sales returns and allowances on the income statement
• B)deduction from gross sales on the income statement
• C)deduction from selling expenses on the income statement
• D)addition to other revenue on the income statement

---

Definitions:

Direct Labor Cost

The total expense a company incurs for employees who work directly on the manufacturing or production of products.

Variable Costing

An accounting method that only allocates variable costs to inventory, treating fixed costs as expenses of the period.

Unit Product Cost

The total cost (direct materials, direct labor, and manufacturing overhead) divided by the number of units produced, representing the cost per individual unit.

Direct Labor Cost

Wages that are paid to workers who are directly involved in the production of goods or services.