Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 38 - No. 1)
How does a business record a trade discount within its accounting system?
The discount is recorded separately in a discount account.
The discount is deducted from the list price to calculate the net price, and the net price is recorded.
The discount is added to the cost of goods sold
The discount is not recorded; only the list price is used.
Explanation
Businesses record sales at the net amount, meaning the trade discount is deducted to reflect the actual amount received.
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