PRC-1 · Chapter 10 · Question 40 of 100
Discount Received is shown in the financial statements as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Other Income or a deduction from Purchases.
Explanation
Discount Received is an incentive received from suppliers for early payment. It represents a cost saving, recorded as other income or a direct reduction to the cost of purchases.
More Preparation of Financial Statements MCQs
- Q42Which of the following items would normally appear under the 'Equity' section of a sole trader's Statement of Financial Position?
- Q43Under the accrual basis of accounting, revenue is recognized when:
- Q44The primary difference between a Trial Balance and an Adjusted Trial Balance is that the Adjusted Trial Balance:
- Q45When preparing final accounts, the value of Closing Inventory is typically extracted from:
- Q46How are 'Drawings' made by the owner treated in the financial statements?