Multiple choice

An allowance of Rs. 25 offered for an early payment of cash of Rs. 975 is to be recorded in

  1. sales book

  2. cash book

  3. journal proper (General Journal)

  4. purchase book

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A cash discount of Rs. 25 allowed on early payment of Rs. 975 (presumably against a debt of Rs. 1000) is recorded in the cash book itself. The cash book captures both the actual cash received (Rs. 975) and the discount allowed (Rs. 25) in a single entry. The cash book has a discount column specifically for recording such cash discounts given or received.