Concerning Purchase Discounts, Which One of the Following Statements Is

question 87

Multiple Choice

Concerning purchase discounts, which one of the following statements is true?

• A)Purchase discounts taken should be deducted from the acquisition cost of the inventory.
• B)The net price method results in recording accounts payable at the maximum value of the liability that the company may be required to pay out.
• C)Purchase discounts lost should be included in the cost of inventory.
• D)An advantage of the gross price method is that it isolates purchase discounts lost and thus highlights inefficiencies.

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Definitions:

Fraud

A deliberate deception practiced to secure unfair or unlawful gains.

Detect Fraud

The process of identifying false or misleading information, typically to gain a financial advantage.

Misrepresentations

False statements or lies that can affect the terms of a contract or agreement, and may lead to legal action if they cause harm or damage.

Due Diligence Inquiry

A comprehensive appraisal of a business or person prior to signing a contract, especially to evaluate its assets and liabilities and assess its commercial potential.