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.

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Definitions:

Accounting Equation

The accounting equation is a fundamental principle of financial accounting that states that assets equal liabilities plus equity, providing the foundation for double-entry bookkeeping.

Transaction Explanation

A description or rationale provided for each transaction within an accounting system, aiding in understanding and verifying the nature of the transaction.

Income Statement

Also known as profit and loss statement, it details a company’s financial performance, including sales, expenses, and profits over a period.

Owner's Equity Statement

An owner's equity statement is a financial document that shows changes in the equity of a company's owners over a period.