What is the internal control advantage of using the net method of accounting for merchandise purchases?
A) It highlights the inefficiency of losing purchase discounts.
B) It guarantees that all purchase discounts will be taken.
C) It automatically increases a firm's net income.
D) It results in a higher quality of inventory on hand for customers.

Question

Quizplus · Accepted Answer

The net method of accounting for merchandise purchases records purchases at the net of discount price, directly showing the cost savings from taking discounts. If discounts are not taken, the cost of purchases increases, highlighting inefficiency in the purchasing process. This method does not guarantee discounts will be taken, automatically increase net income, or affect the quality of inventory.

What Is the Internal Control Advantage of Using the Net