Cash discount (also known as settlement discount) received is…?
Select ONE answer:
- deducted from the amount payable by debtors when money is received from them.
- given by a firm to its customers when it sells goods on credit.
- deducted by a firm when it pays its creditors.
- None of the above.
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple choice question is suitable for Accounting KS5 classes.
The answer is 3
- Any amount of discount deducted from the amount payable by debtors when money is received from them is cash discount allowed.
- 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.
- Correct
- Not correct
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