Which one of the following statements regarding sales discounts is correct?
A)If a company offers a discount to encourage prompt payment and the discount is taken,the discount reduces the amount of net sales.
B)Credit terms of "2/10,n/30" means that if payment is made in two days,a 10% discount may be taken;if not paid within two days,the full invoice price will be due in thirty days.
C)The terms "sales discounts" and "purchase discounts" are used interchangeably by a company.
D)A sales discount is subtracted from Sales Revenue whereas a purchase discount is added to Cost of Goods Sold.

Question

Quizplus · Accepted Answer

Sales discounts are subtracted in calculating net sales.Credit terms of "2/10,n/30" mean that a 2% discount is offered if payment is made within 10 days;otherwise the full amount is due in 30 days.Sales discounts are from a seller's perspective;purchase discounts are from a purchaser's perspective.

Which One of the Following Statements Regarding Sales Discounts Is