Under the net method, purchase discounts lost are:
A) Included in purchases.
B) Added to accounts payable.
C) Included in interest expense.
D) Deducted from discount income.

Question

Quizplus · Accepted Answer

Under the net method, purchase discounts lost are recorded as an interest expense. This is because the net method assumes that discounts for prompt payment are taken. If the discount is not taken, the cost is considered an interest expense for not taking advantage of the discount within the discount period.

Under the Net Method, Purchase Discounts Lost Are