Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 48 - No. 6)

How does a cash discount offered to a customer affect the business's financial statements?

Increases revenue, increases expenses

Decreases revenue, decreases expenses

Decreases revenue, increases expenses

Increases revenue, decreases expenses

The discount reduces the amount the customer pays (revenue), and it decreases the bad debt expense.