chap 4 theory

Question 1

State the diff. between trade discount and cash discount 1.

Answer 1

-trade discount is a reduction to the list price of goods while cash discount is a reduction to the invoice price of goods.

Question 2

State the diff. between trade discount and cash discount 2.

Answer 2

-trade discount is not recorded in the ledger while cash discount is recorded in the ledger as discount allowed or discount received,

Question 3

state the diff. between discount allowed and discount received 1.

Answer 3

discount allowed is given by the business to credit customers when the credit customers pay early while discount received is given by the credit suppliers to the business when the business pays early.

Question 4

state the diff. btwn discount allowed and discount received 2.

Answer 4

discount allowed is recorded as an expense and will decrease profit while discount received is recorded as an income and will increase profit.

Question 5

pending….