Which of the Following Statements Regarding the Gross and Net

question 50

Multiple Choice

Which of the following statements regarding the gross and net methods for trade accounts payable is not true?

• A)The net method overstates accounts payable at the end of the accounting period.
• B)The net method highlights management inefficiency because purchase discounts lost are recorded whenever an invoice is paid after the cash discount period has expired.
• C)The gross method is more widely used in practice.
• D)The net method more accurately measures liquidity.

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