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It is classified as an expense to the trader.
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What is the difference between discount allowed and discount received and their accounting treatment?
Discount allowed is that amount which is given by our company to others while discount received is that amount which is received by our company from others.while discount allowedDebit discount allowedCredit cashwhile discount receivedDebit cashCredit discount received
What is the difference between discount allowed and discount received?
discount allowed means the discount which is given by a seller to the buyer. and discount received means the discount received by the seller for purchases made
What are the benefits of offering a single trade discount versus a discount series?
In business accounting
What are the problems arise from accounting matching principle?
Its not easy match it with the bad debts and the discount allowed if there are provisions made during the period that relate to the period under review.
What type of property is not classified for accounting purposes?
For the Army, real property is not classified for accounting purposes. All Army property, except real property, is classified as expendable, nonexpendable, or durable
Does discount allowed have a debit or credit balance in the ledger balance?
Discount allowed is debit
How do you pass journal entry for discount allowed?
Debit cash / bankCredit discount allowed
Provision for discount allowed and discount received?
provision for discount received
What is the Difference between trade discount and discount allowed?
trade discount is for trade customer (who has an account with the supplier) discount allowed is for walk in customers (no account holders)
When is discount allowed to debtors?
Discount allowed for the early settlement of accounts - This discount is allowed to your debtors or customers at the time of the settlement of their account. You may agree with your customers to allow a certain percentage of discount allowed e.g. 2½ % if they settle the full amount on an invoice within 30 days). This discount is recorded when a debtor or customer settles the full invoice within the specified time. This discount needs to be entered as an expense in a Discount Allowed account and will reduce the net profit and will have no effect on the gross profit.This is murali +9199591-22272
What is the Difference between trading discount and discount allowed?
Discounts may be offered on sales of goods to attract buyers. Discounts may be classified into two types:Trade Discounts: offered at the time of purchase for example when goods are purchased in bulk or to retain loyal customers.Cash Discount: offered to customers as an incentive for timely payment of their liabilities in respect of credit purchases.Trade DiscountTrade discounts are generally ignored for accounting purposes in that they are omitted from accounting records. Therefore, sales, along with any receivables in the case of a credit sale, are recorded net of any trade discounts offered.ExampleBike LTD as part of its sales promotion campaign has offered to sell their bikes at a 10% discount on their listed price of $100. Sale revenue and any accounts receivable will be recorded net of trade discount, i.e. $90 per bike.Cash DiscountCash discounts result in the reduction of sales revenue earned during the period. However, not all customers may qualify for the cash discount. It is therefore necessary to record the initial sale and receivables at the gross amount (after deducting any trade discounts!) and subsequently decreasing the sale revenue and accounts receivable by the amount of discount that is actually allowed. Following double entry is required to record the cash discount:DebitDiscount Allowed (income statement)CreditReceivableDebiting discount allowed ledger has the effect of reducing gross sales revenue by the amount of cash discount allowed. Consequently, receivables are credited to reduce their balance to the amount that is expected to be recovered from them, i.e. net of cash discount.ExampleBike LTD as part of its sales promotion campaign has offered to sell their bikes at a 10% discount on their listed price of $100. If customers pay within 10 days from the date of purchase, they get a further $5 cash discount. Bike LTD sells a bike to XYZ who pays within 10 days. Before we proceed with the accounting entries, it is necessary to first distinguish between the two types of discounts being offered by Bike LTD. The 10% discount is a trade discount and should therefore not appear in Bike LTD's accounting records. The $5 discount is a cash discount and must be dealt with accordingly.The initial sale of the bike will be recorded as follows:$$DebitXYZ (receivable)90CreditSales90As XYZ qualifies for the cash discount, the following double entry will be required to record the discount allowed:$$DebitDiscount Allowed (income statement)5CreditXYZ (receivable)5The above entries have resulted in sales of Bike LTD being reduced to $85 (100-90-5). The receivable from XYZ has also been reduced to this amount effectively. wriiten by nana tweneboah kodua (prisdark academy)
An accounting firm would be classified as which type of business?
Service industry
