Statement 1: The discount on notes payable amortized during the period on a non-interest bearing note is not the same with the concept regarding the discount on note payable amortized for an interest bearing note with unrealistic rates ( market rate> stated rate). Statement 2: Purchase discounts that are accounted under the net method initially recognizes the amount of merchandise inventory and accounts payable at net of cash discount under the perpetual inventory system. Statement 3: If at the end of the reporting period, the discount period has already lapsed and the accounts are still unpaid, the company must recognize a purchase discount under the gross method. All statements are false. Only one statement is true. Only one statement is false. All statements are true.
Statement 1: The discount on notes payable amortized during the period on a non-interest bearing note is not the same with the concept regarding the discount on note payable amortized for an interest bearing note with unrealistic rates ( market rate> stated rate). Statement 2: Purchase discounts that are accounted under the net method initially recognizes the amount of merchandise inventory and accounts payable at net of cash discount under the perpetual inventory system. Statement 3: If at the end of the reporting period, the discount period has already lapsed and the accounts are still unpaid, the company must recognize a purchase discount under the gross method. All statements are false. Only one statement is true. Only one statement is false. All statements are true.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Statement 1: The discount on notes payable amortized during the period on a non-interest bearing note is not the same with the concept regarding the discount on note payable amortized for an interest bearing note with unrealistic rates ( market rate> stated rate).
Statement 2: Purchase discounts that are accounted under the net method initially recognizes the amount of merchandise inventory and accounts payable at net of cash discount under the perpetual inventory system.
Statement 3: If at the end of the reporting period, the discount period has already lapsed and the accounts are still unpaid, the company must recognize a purchase discount under the gross method.
Statement 2: Purchase discounts that are accounted under the net method initially recognizes the amount of merchandise inventory and accounts payable at net of cash discount under the perpetual inventory system.
Statement 3: If at the end of the reporting period, the discount period has already lapsed and the accounts are still unpaid, the company must recognize a purchase discount under the gross method.
All statements are false.
Only one statement is true.
Only one statement is false.
All statements are true.
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