The Purchases Discounts Taken Account May Appear in the Accounting

question 112

Multiple Choice

The Purchases Discounts Taken account may appear in the accounting records if which one of the following methods is used to account for purchase discounts?

• A) net price method
• B) gross price method
• C) allowance method
• D) sales price method

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Definitions:

Inventory Cost

The total cost incurred to procure, produce, and store inventory, including purchase price, production, and handling costs.

Gross Profit

the difference between revenue and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

Cost Of Goods Sold

The immediate expenses directly related to creating a company's sold products, covering both labor and materials costs.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, after all sales and purchases have been accounted for.