A Disadvantage of Using the Gross Price Method to Account

question 100

Multiple Choice

A disadvantage of using the gross price method to account for cash discounts extended by the seller to its customer is that

• A) the method reports accounts receivable at the net realizable value.
• B) the method overstates current sales and accounts receivable.
• C) the method requires more bookkeeping than the net price method.
• D) the method enables sales returns and allowances to be recorded at gross amounts.