lec2 pt trade and cash discount sum Flashcards
trade sicount
disocunt given by on etrader to another
where is trade discount shown to be deducted
and what does it indicate
on the invoice
indicates amount buyer is charged for the goods
what does trade discount reduce
purchase price and amount on which VAT is charged
what is cash discount
reduction in amount customer has to pay provided payment made within a given peiod
when is cash discount made know and by who
by seller at the time of the sale e.g 5% if paid w.in 30 days
what is cash discount effet on price
doesnt reduce the price that is paid
how is the cash discount shown in income statement/books
expense - discount allowed
income - discount recieved
cash discount reduces the amount that …. is charged
VAT
which discount is entered in our books
cash discount
when is cash discount allowed v trade discount- in terms of timing
at time of payment - cash
at time of purchase - trade
which is shown in invoice
trade discount
what 3 notes do we make when we doing cash discount/ WHICH 3 ACCOUNTS ARE AFFECTED
BANK ACCOUNT
increase or decrease by discounted amount
TRADE RECEIVABLE/PAYABLE
reduced by full amount
debtors no longer owe
company has paid full amount owed to payable/creditor
recorded as - DISCOUNT ALLOWED/RECIEVED
expense or income in P and L as DA/DR
what happens when bank account increase
increase in asset of the business
