chapter 4 Flashcards
1
Q
what are ledger accounts?
A
ledger accounts of all transactions relating to specific asset, liability, equity, income or expense.
2
Q
what is trade discount?
A
reduction to the list price of goods
3
Q
what does trade discount do?
A
given to encourage customers to buy in bulk and used to encourage their patronage and loyalty.
trade discount is not recorded.
4
Q
what is cash discount?
A
reduction to invoiced price
5
Q
what does cash discount do?
A
given to encourage credit customers to pay early, normally in a specified amount of time.
Recorded as discount allowed/ received
6
Q
what is the difference between cash discounts and trade discounts?
A
- trade discount is the reduction to the list price of goods but cash discount is the reduction to invoiced price.
- trade discount is not recorded in ledger but cash discount is recorded in ledger
