Discount received is recorded on which of the following side of a cash book?
A. Receipts
B. Payments
C. Income
D. Expenditure
Answer: Option B
Solution (By Examveda Team)
Discount received is recorded on the payments side of a cash book because it represents a reduction in the amount payable to creditors.In accounting, a business may receive a discount from suppliers when making early payments or bulk purchases. This discount received reduces the cash outflow and is considered an income for the business, but it is recorded on the payments side of the cash book.
Example:
Suppose a business purchases goods worth ₹10,000 on credit from a supplier. The supplier offers a ₹1,000 discount for early payment. The business will pay only ₹9,000 instead of ₹10,000.
Cash Book Entry:
₹9,000 will be recorded as an actual payment to the supplier.
₹1,000 (Discount Received) will be recorded separately on the payments side to adjust the total liability.
Why Not Other Options?
Receipts: Used for recording cash inflows (money received), but discount received is not a cash receipt.
Income: Though discount received is an income, it is not recorded in the income section of the cash book. Instead, it appears as a reduction in payment.
Expenditure: This includes expenses paid, whereas discount received reduces expenditure rather than increasing it.
Thus, Discount Received is correctly recorded on the Payments side of the cash book.
This Question Belongs to Commerce >> Accounting
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It is right answer because in cash book credit side is for payment so income received record in that side
Here the term discount received means it received by customer, so business will pay. So i think that's why it recorded in payment side of cashbook.
Option: C is correct
Discount Received is an income for the concern so debit side of the cash book or receipts side in the cash book. In This income the company is not going to receive but instead of cash payment the company get Discount so it's not option B
Discount received means income
It Is Option A Only Because The Entry For Discount Received Is Cash a/c Record In Debit Side and Discount a/c Record In Credit Side. So In Cash Book When Cash Will Increase Then It Will Record On Receipts Side i.e. Debit Side of Cash Book.
When we are making payment to creditor we received Discount Received now look for journal Entry
Creditor A/c Dr
To Cash A/c
To Discount Received A/c
Explanation:
Dear if we observe cash book along with Dis count Column there are two side Receipt Side And Payment Side on Receipt Side there is a Column of Discount Allowed And On Payment side their is a column of Dis received.
Sir, Is A is not a correct answer
how discount received is an income of the business.
Cash discount received entry is
CashA/c Dr
To Discount received A/c
Answer A is correct
Debit side of cash book