Purchase discounts appear on the income statement of a company that uses the perpetual inventory method.

Name: Purchase discounts appear on the income statement of a company that uses the perpetual inventory method.
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Question

Quizplus · Accepted Answer

Purchase discounts are accounted for as a reduction of the cost of inventory purchased and do not appear directly on the income statement; they affect the income statement indirectly through the cost of goods sold.

Purchase Discounts Appear on the Income Statement of a Company