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The Gross Method of Recording Purchases Refers to the Method

Question 123
Multiple Choice

The gross method of recording purchases refers to the method of recording: A) Purchases at the invoice price less any cash discounts. B) Specified amounts and timing of payments that a buyer agrees to make in return for being granted credit. C) Purchases at the full invoice price, without deducting any cash discounts. D) Inventory at its selling price. E) Inventory at the lower of cost or market.

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Q 124
An expense resulting from failing to take advantage of cash discounts on purchases is called: A) Sales discounts. B) Trade discounts. C) Purchases discounts. D) Discounts lost. E) Discounts earned.
Q 125
A company using the net method of recording purchases failed to take advantage of a discount available. When they pay the full (gross) amount of an invoice at the end of the credit period the journal entry will include a debit to: A) Merchandise Inventory. B) Sales Discounts. C) Discounts Lost. D) Cash. E) Accounts Receivable.
Q 126
A company that uses the net method of recording invoices made a purchase of $400 with terms of 2/10, n/30. The entry to record the purchase would include: A) A debit to Merchandise Inventory for $392. B) A credit to Discounts Lost for $8. C) A credit to Cash for $392. D) A debit to Discounts Lost for $8. E) A debit to Cash for $392.
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