Multiple choice

In journal proper, only _________ discount is recorded.

  1. trade

  2. cash

  3. Both 1 and 2

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Trade discounts are never recorded in the books of accounts as they are deducted directly from the invoice price. Cash discounts, however, are recorded to track the cost of encouraging early payments from customers.

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