If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as
A) a deduction from sales in the income statement.
B) an item of "other expense" in the income statement.
C) a deduction from accounts receivable in determining the net realizable value of accounts receivable.
D) sales discounts forfeited in the cost of goods sold section of the income statement.

Question

Quizplus · Accepted Answer

When a company uses the gross method to record accounts receivable, sales discounts taken by customers are reported as a deduction from sales in the income statement. This approach shows the sales revenue at the gross amount, with any discounts taken by customers reducing this amount to reflect the net sales revenue.

If a Company Employs the Gross Method of Recording Accounts