Purchase discount - accounting

label Accounting
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

Purchases Discount:

a. is a contra-cost account

b. has a normal debit balance

c. decreases Net Income

d. All of the above.

I think it is D, but my study partner says it is something else

May 15th, 2015

The answer is c..Decreases net income.

Purchase discount  affects the selling price of an item thus reducing sales in relations to the discount rate offered.

Example  if a selling price of an item was marked at $10, then due to competition  a discount of 10% is offered, the item will be sold at $9 hence $1 discount.The seller will get $9 instead of $10 hence reductions of sales income thus decreasing net income.

May 15th, 2015

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May 15th, 2015
Sep 23rd, 2017
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