Asked by Morgan Jones on May 22, 2024
Verified
When purchases are recorded at net amounts,any discounts lost as a result of late payments are reported as an expense.
Net Amounts
The remaining values after all deductions, such as discounts or expenses, have been made.
Discounts Lost
Costs incurred by a company for not taking advantage of purchase discounts offered by suppliers or creditors.
Late Payments
Late payments are amounts due that are not paid by their due date, often resulting in additional charges or penalties.
- Gain an understanding of the differences in the application of net and gross methods for the recording of purchases and sales activities.
- Uncover and figure out vital financial statistics including gross profit, cost of goods sold, and sales discounts.
Verified Answer
SW
Shamia WilliamsMay 26, 2024
Final Answer :
True
Explanation :
When purchases are recorded at net amounts, any discounts lost due to late payment are considered as an expense and reported in the income statement.
Learning Objectives
- Gain an understanding of the differences in the application of net and gross methods for the recording of purchases and sales activities.
- Uncover and figure out vital financial statistics including gross profit, cost of goods sold, and sales discounts.