Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 16 - No. 9)
What is the impact of receiving a cash discount on a trade receivable?
The cash discount will cause an increase in the receivable.
The cash discount will cause a decrease in the receivable.
The cash discount has no effect on the receivable.
The cash discount is recorded as a debit to the receivable.
Explanation
A cash discount reduces the amount of money the customer owes to the business, which means trade receivables decrease.
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