0
Trade discounts are not entered in the accounting records. They are not considered to be a part of the sale because the exchange agreement was based on the reduced price.
NB: Remember the general rule that sales are recorded when an exchange takes place. The measurement of the sale is based on the exchange price. Therefore, the amount recorded as a sale is the invoice price. The entries previously shown for a $4,000 sale would also be appropriate if the list price was $5,000, subject to a 20% trade discount.
Wiki User
∙ 11y ago
Add your answer:
Earn +20 pts
Is a trade discount on a purchased merchandise recorded in the accounts?
Trade discounts are not entered in the accounting records. They are not considered to be a part of the sale because the exchange agreement was based on the reduced price.
What are the different kinds of discount?
trade discounts, cash discounts, discount series and seasonal discounts
How cash discount differ from trade discount?
Trade discounts are guranteed discounts a business is getting by purchasing from a seller. Cash discounts are OPTIONAL discounts that a buyer gets if they opt to pay their bill (invoice) earlier then the due date. The seller specifies in the invoice how many days earlier a buyer has to pay their bill to get the cash discount. If a cash discount is taken, it is applied after the trade discounts, but before shipping and handling charges.
How are purchase discounts and purchase returns recorded by a company using the periodic inventory system?
They are recorded as a direct reduction to the Purchases account.
What is a trade discount?
Trade discount is the discount that is deducted from the source and then the actual amount is shown. The trade discounts are not shown in the books of accounts. Only the cash discount is shown in the books of accounts but the trade discount will be deducted from the actual and the net amount will be considered.
Is a trade discount on a purchased merchandise recorded in the accounts?
Trade discounts are not entered in the accounting records. They are not considered to be a part of the sale because the exchange agreement was based on the reduced price.
What are the different kinds of discount?
trade discounts, cash discounts, discount series and seasonal discounts
Purchase discounts is the same as trade discounts true or false?
false
Trade discounts also called functional discounts are?
yes, trade discounts is also called functional discounts I wish I could improve this answer since it does not address the actual question of what these discounts are, but I am also looking for that answer, so hopefully someone will actually take the time to read the question before answering it.
How cash discount differ from trade discount?
Trade discounts are guranteed discounts a business is getting by purchasing from a seller. Cash discounts are OPTIONAL discounts that a buyer gets if they opt to pay their bill (invoice) earlier then the due date. The seller specifies in the invoice how many days earlier a buyer has to pay their bill to get the cash discount. If a cash discount is taken, it is applied after the trade discounts, but before shipping and handling charges.
How are purchase discounts and purchase returns recorded by a company using the periodic inventory system?
They are recorded as a direct reduction to the Purchases account.
Are the amortization of discounts or premiums recorded as part of interest income on the income statement?
True
Why can't you calculate the series of trade discounts?
Because I'm a bit tired at the moment.
How do you record trade discounts in the General Journal?
shyama/c........dr to purchases a/c
How do you calculate trade discounts?
You have to ask the seller what trade discount they will give you. Its usually a sliding scale based on volume or established rating of the buyer with that seller.
Can you Give some examples of cash discount and trade discount?
can you give some example if cash discounts?
What is a trade discount?
Trade discount is the discount that is deducted from the source and then the actual amount is shown. The trade discounts are not shown in the books of accounts. Only the cash discount is shown in the books of accounts but the trade discount will be deducted from the actual and the net amount will be considered.
