Which of the Following Statements Is False

question 19

Multiple Choice

Which of the following statements is false?

• A) Similar to the situation with its accounts receivable, a firm should monitor its accounts payable to ensure that it is making its payments at an optimal time.
• B) Some firms ignore the payment due period and pay later, in a practice referred to as pushing the accounts payable.
• C) Suppliers may react to a firm whose payments are always late by imposing terms of cash on delivery (COD) or cash before delivery (CBD).
• D) If the accounts payable outstanding is 40 days and the terms are 2/10, net 30, the firm can conclude that it generally pays late and may be risking supplier difficulties.

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Definitions:

Retail Value

The price point at which goods are sold to consumers, typically set higher than the wholesale price to cover costs and generate profit.

Average Cost Retail Inventory Method

An inventory valuation method that determines the cost of ending inventory and cost of goods sold based on the average cost of all similar items in the inventory.

Cost-to-retail Percentage

A method used in inventory valuation that compares the cost of goods to their retail price to calculate inventory value.

Purchases Returns

Goods returned by the buyer to the supplier due to defects, damage, or other reasons, which can reduce the total amount of purchases.