Purchase Discounts Lost Is Shown as a Reduction of Cost

question 2

True/False

Purchase Discounts Lost is shown as a reduction of cost of goods sold in the income statement.

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Definitions:

Conversion Costs

All manufacturing costs other than direct material costs.

Absorption Costing

A method of inventory costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Direct Materials Costs

Costs directly traceable to the production of a product, including raw materials and component parts.