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Problem 1. Theoretically, cash discounts permitted should be a. Added to other income. whether taken or not b. Added to other income, only if taken C. Deducted from inventory, whether taken or not d. Deducted from inventory, only if taken

Problem 1. Theoretically, cash discounts permitted should be a. Added to other income. whether taken or not b. Added to other income, only if taken C. Deducted from inventory, whether taken or not d. Deducted from inventory, only if taken

FINANCIAL ACCOUNTING
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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a. Added to other income. whether taken or not b. Added to other income, only if taken Deducted from inventory, whether taken or not d. Deducted from inventory, only if taken C. accounted for in the computation of cost of goods sold? a. Trade discounts applicable to purchases b. Cash discounts taken- c. Purchase returns and allowances d. Cost of transportation for merchandise purchased 3. The use of purchase discount account implies that the recorded cost of a purchased inventory is a. Invoice price b. Invoice price plus any purchase discount lost c. Invoice price less the purchase discount taken d. Invoice price less the purchase discount allowable whether taken or not 4. The use of a discount lost account implies that cost of a purchased inventory is a. Invoice price b. List price c. Invoice price less the purchase discount taken d. Invoice price less the purchase discount allowable whether or not taken 5. The valuation of inventory on a prime cost basis a. Would achieve the same results as direct costing b. Would exclude all overhead from inventory cost c. Is always achieved when standard costing is adopted d. Is always achieved when the FIFO is adopted
Transcribed Image Text:a. Added to other income. whether taken or not b. Added to other income, only if taken Deducted from inventory, whether taken or not d. Deducted from inventory, only if taken C. accounted for in the computation of cost of goods sold? a. Trade discounts applicable to purchases b. Cash discounts taken- c. Purchase returns and allowances d. Cost of transportation for merchandise purchased 3. The use of purchase discount account implies that the recorded cost of a purchased inventory is a. Invoice price b. Invoice price plus any purchase discount lost c. Invoice price less the purchase discount taken d. Invoice price less the purchase discount allowable whether taken or not 4. The use of a discount lost account implies that cost of a purchased inventory is a. Invoice price b. List price c. Invoice price less the purchase discount taken d. Invoice price less the purchase discount allowable whether or not taken 5. The valuation of inventory on a prime cost basis a. Would achieve the same results as direct costing b. Would exclude all overhead from inventory cost c. Is always achieved when standard costing is adopted d. Is always achieved when the FIFO is adopted
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