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Discount received is recorded on which of the following side of a cash book?
Answer & Solution
Correct Answer:
Option
B
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.
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.
Join the Discussion
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LoginCreditor 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.
CashA/c Dr
To Discount received A/c
Answer A is correct
Debit side of cash book