Purchase Discounts Should Be Reported as A(n)

question 102

Multiple Choice

Purchase discounts should be reported as a(n) :

• A) Deduction from the purchase cost of the goods.
• B) Adjustment in full to the ending inventory amount.
• C) Contra inventory account.
• D) Adjustment in full to cost of goods sold.

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Definitions:

Australian Accounting Standards

Rules and guidelines set by the Australian Accounting Standards Board (AASB) that govern how financial reporting is conducted in Australia.

IASB

Stands for International Accounting Standards Board, responsible for developing International Financial Reporting Standards (IFRS).

Economic Benefits

The gains received or receivable by an entity as a result of past or future transactions or events.

Asset

A present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.