Question

The purpose of the gross method of accounting for sales discounts is to a.avoid recording a subsequent adjusting entry. b.record the largest amount of sales to show robust revenues. c.assume the customer will not take the discount. d.abide by the GAAP requirements to record sales in the amount most likely to be received.

Answer 1

The main purpose of the gross method of accounting for sales discounts is to abide by the GAAP requirements to record sales in the amount most likely to be received.

What are GAAP requirements?

Also called the Generally Accepted Accounting Principles requirements, it refers to the collection of accounting rules and standards for financial reporting.

Hence, the gross method of accounting for sales discounts are used because its abide by the GAAP requirements to record sales in the amount most likely to be received.

Therefore, the Option D is correct.

Read more about GAAP

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