Assuming that trade discount for the sales invoice on 16 Feb was $30 lower, 1. Discount expense for February will not change. 2. Sales revenue for February will increase by $30. 3. Cost of Sales for February will decrease by $30. Only statement 2 is INCORRECT. Only statement 1 is CORRECT. Only statement 3 is INCORRECT. Only statement 2 is CORRECT.
Assuming that trade discount for the sales invoice on 16 Feb was $30 lower, 1. Discount expense for February will not change. 2. Sales revenue for February will increase by $30. 3. Cost of Sales for February will decrease by $30. Only statement 2 is INCORRECT. Only statement 1 is CORRECT. Only statement 3 is INCORRECT. Only statement 2 is CORRECT.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Assuming that trade discount for the sales invoice on 16 Feb was $30 lower, 1. Discount expense for February will not change. 2. Sales revenue for February will increase by $30. 3. Cost of Sales for February will decrease by $30.
Only statement 2 is INCORRECT.
Only statement 1 is CORRECT.
Only statement 3 is INCORRECT.
Only statement 2 is CORRECT.
Expert Solution
Step 1
The company offers trade discounts to increase sales by lowering the price and the reason is that the customers are attracted to the lower prices. The trade discount lowers the selling price which may affect the profit of the company. It means trade discounts affect the profitability of the company.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education