Which of the following is true about accounts payable?1. Accounts payable are also called trade accounts payable.2. When accounts payable are recorded at the net amount, a Purchase Discounts account will be used.3. When accounts payable are recorded at the gross amount, a Purchase Discounts Lost account will be used.
A) 1
B) 2
C) 3
D) Both 2 and 3 are true.

Question

Quizplus · Accepted Answer

Accounts payable are also called trade accounts payable. Option 2 and 3 are incorrect as they contradict each other. When accounts payable are recorded at the net amount, no separate Purchase Discounts account is used. When accounts payable are recorded at the gross amount, a separate Purchase Discounts account will be used. If the discount is not taken, the amount of the discount is put into a separate account called Purchase Discounts Lost.

Which of the Following Is True About Accounts Payable?1