Ford Motor Co. is considering alternate methods ofaccounting for the cash discounts it takes when payingsuppliers promptly. One method suggested was to reportthese discounts as financial income when payments aremade. Comment on the propriety of this approach.

Ford Motor Co. is considering alternate methods ofaccounting for the cash discounts it takes when payingsuppliers promptly. One method suggested was to reportthese discounts as financial income when payments aremade. Comment on the propriety of this approach.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Ford Motor Co. is considering alternate methods of
accounting for the cash discounts it takes when paying
suppliers promptly. One method suggested was to report
these discounts as financial income when payments are
made. Comment on the propriety of this approach.

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