A Student in the Accounting Principles Course Comes to You

question 35

Essay

A student in the accounting principles course comes to you, an upper-division accounting major, for an explanation of the difference between the gross price and net price methods of recording credit sales.The principles student wants to know why, if there is no difference in net income, a company would prefer one method over the other.
Required:
Explain the basics of each method, how each method is reported on the income statement, and the advantages and disadvantages of each method.

---

Definitions:

Novel

A fictitious prose narrative of book length, typically representing character and action with some degree of realism.

Early Adopters

Individuals or businesses that start using a new product, service, or technology soon after it is launched, before the majority of others.

IDEATE Method

A process or approach in innovation and problem-solving that focuses on generating, developing, and communicating new ideas.

Eli Whitney

An American inventor best known for inventing the cotton gin, a significant invention in the agricultural sector.