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When a firm uses the net approach of accounting for cash discounts on inventory purchases and pays after the discount period, the payment would have
When a firm uses the net approach of accounting for cash discounts on inventory purchases and pays after the discount period, the payment would have the following effects:
|
| Interest Expense |
| Purchase Discount Forfeited |
| Inventory Account |
|
| a. | Increase |
| None |
| None |
|
| b. | Increase |
| Increase |
| Decrease |
|
| c. | Decrease |
| None |
| None |
|
| d. | Decrease |
| Increase |
| Decrease |
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