Statement 1: If at the end of the reporting period, the discount period is not yet lapsed and the accounts are still unpaid, the company must recognize a purchase discount under the gross method. Statement 2: Non-trade payables are classified either as current or non-current liabilities base on their expected timing of settlement as the end of the reporting period. Statement 3: When discount on notes payable account is amortized, it decreases the carrying value of the liability. a.Two of the statements are false. b.One of the statements is false. c.All of the statements are true. d. None of the statements is tru
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Statement 2: Non-trade payables are classified either as current or non-current liabilities base on their expected timing of settlement as the end of the reporting period.
Statement 3: When discount on notes payable account is amortized, it decreases the carrying value of the liability.
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