question archive Purchase discounts should be reported as a(n): a) Deduction from the purchase cost of the goods
Purchase discounts should be reported as a(n): a) Deduction from the purchase cost of the goods
Subject:BusinessPrice:2.88 Bought3
Purchase discounts should be reported as a(n):
a) Deduction from the purchase cost of the goods.
b) Adjustment in full to the ending inventory amount.
c) Contra inventory account.
d) Adjustment in full to cost of goods sold.
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The purchase discount is treated as a deduction to the total cost of purchases. Thus, it decreases the net purchases and would affect the amount of cost of goods sold. The purchase discount account is used when the periodic inventory system is used. However, when the perpetual inventory system, is used, purchase discount is directly recorded as a deduction to the inventory account.
