Foote Company was granted a purchase discount of $200 on merchandise the company had purchased a few days ago.Foote uses the perpetual inventory system.Which of the following reflects the effects of this event on the financial statements?

Question

Quizplus · Accepted Answer

A purchase discount reduces the cost of the inventory and the associated account payable on the balance sheet.A purchase discount does not directly affect the income statement or the statement of cash flows.

Foote Company Was Granted a Purchase Discount of $200 on Merchandise