Which of the Following Statements Is Incorrect Regarding Sales Discounts

question 158

Multiple Choice

Which of the following statements is incorrect regarding sales discounts?

• A)If a customer pays within the discount period,the selling price of the merchandise is reduced.
• B)Sales Discounts is a contra-revenue account and is subtracted from Sales Revenue.
• C)The net and gross methods have identical journal entries,just made at different points in time.
• D)If a company takes advantage of sales discounts on its purchases,the cost of the inventory is ultimately reduced as a result of the discount.

---

Definitions:

Corporation

A legal entity separate from its owners, offering limited liability protection, the ability to raise capital through the sale of shares, and perpetuity.

Market Value

The market rate for buying or selling an asset or service currently.

Ownership

The state or fact of exclusive rights and control over property, which can be tangible or intangible.

Valuation Allowance

An accounting procedure that an entity might use against its deferred tax assets indicating that it is more likely than not that some portion or all of the asset will not be utilized.