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(T / F) When companies offer trade discounts, the gross selling price (gross invoice price) at which the sale is recorded is equal to the list price minus any trade discounts.

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(T / F) Sales discounts arise when the seller offers the buyer a cash discount of 1 percent to 3 percent to induce early payment of an amount due.

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(T / F) Cost of goods sold = Beginning inventory + Net cost of purchases − Ending inventory.

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(T / F) Beginning inventory + Net cost of purchases = Cost of goods available for sale.

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(T / F) A classified income statement has four major sections—operating revenues, cost of goods sold, operating expenses, and non-operating revenues and accounts receivables.

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(T / F) Non-operating revenues and expenses are revenues and expenses not related to the sale of products or services regularly offered for sale by a business.

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(T / F) The two basic methods for estimating uncollectible accounts under the allowance method are the percentage-of-cost of sales method and the percentage-of-receivables method.

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(T / F) Liabilities result from some past transaction and are obligations to pay cash, provide services, or deliver goods at some time in the future.

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(T / F) Generally, the lower the accounts receivable turnover, the better; and the shorter the average collection period, the better.

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(T / F) Current liabilities are classified as clearly determinable, estimated, and contingent.

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Answer 1