Which Statement Is Correct

question 11

Multiple Choice

Which statement is correct?

• A)The "gross" method for recording cash discounts is conceptually better than the "net" method.
• B)The net method understates expenses.
• C)The gross method overstates revenue.
• D)Under the "gross" method, an entry is needed if the discount is taken.

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Definitions:

Ending Inventory

Ending inventory refers to the total value or quantity of unsold goods that a company holds at the end of an accounting period.

Cash Disbursements

The outflow of cash for expenses or investments, typically detailed in a financial planning or accounting report.

Goods Purchased

Items bought by a company for resale or use in production, contributing to inventory.

Variable Selling Expenses

Costs that fluctuate in direct proportion to changes in sales volume, such as commissions and shipping charges.