Accounting Multiple Choice Question – 15 August 2019

Cash discount (also known as settlement discount) received is…?

Select ONE answer:

1. deducted from the amount payable by debtors when money is received from them.
2. given by a firm to its customers when it sells goods on credit.
3. deducted by a firm when it pays its creditors.
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Any amount of discount deducted from the amount payable by debtors when money is received from them is cash discount allowed.
2. Discount given by a firm to its customers at the time of sale is a trade discount. A cash discount is allowed at the time of payment.
3. Correct
4. Not correct

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