How are trade discounts treated when computing the cost of purchase?
AAdded to cost
BShown as income
CIgnored in cost
DDeducted from cost
Answer & Solution
Correct answer: D. Deducted from cost
Trade discounts and rebates reduce what is actually paid for the goods, so they are deducted from the purchase cost.
Keep practising Inventories
Browse all Inventories questions for CA Foundation, or explore more Accounting topics.
Related questions
Land held for resale by a dealer is classified asWhich items count as inventories held as materials or supplies?Stock on 5 April is 2,40,000; April 1-5 sales 50,000 at 25% on cost, purchases 15,000. StoWhich three heads make up the cost of inventories?Costs of conversion include costs directly related to units, such asThe cost of inventories may be unrecoverable if stock isWhich inventory method most closely mimics the physical flow of goods?Opening stock 40,000; purchases 1,60,000; sales 2,00,000; gross profit 25% of sales. Closi