Which of the Following Statements Is FALSE

question 35

Multiple Choice

Which of the following statements is FALSE?

• A)The lower the discount percentage offered,the greater the cost of forgoing the discount and using trade credit.
• B)A firm should choose to borrow using accounts payable only if trade credit is the cheapest source of funding.
• C)A firm should always pay on the latest day allowed.
• D)A firm should strive to keep its money working for it as long as possible without developing a bad relationship with its suppliers or engaging in unethical practices.

Recognize the importance of gross profit margin, how it’s calculated, and its distinction from the gross profit amount.

Identify the components and structure of the statement of income under different inventory systems.

Comprehend the classification and impact of purchase returns, allowances, and discounts on financial statements.

Grasp the significance of operating expenses and their relation to profit margin.

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss of value due to wear and tear, and obsolescence.

Plant Asset

Permanent real assets employed for creating products and offering services, like facilities, mechanical devices, and apparatus.

Market Value

The immediate cost set for assets or services to be exchanged in a market setting.

Plant Assets

Long-term tangible assets that are used in the operations of a business and are not intended for sale, such as machinery, buildings, and land.