Commerce Exam > Commerce Questions > Discount Account will always have:a)Only debi...
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Discount Account will always have:
- a)Only debit balance
- b)Nil balance
- c)Only credit balance
- d)Debit or Credit balance
Correct answer is option 'D'. Can you explain this answer?
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Discount Account will always have:a)Only debit balanceb)Nil balancec)O...
Discount is a nominal account which can have either a debit or a credit balance because discount can be allowed as well as received. If it is discount allowed it can have a debit balance and if it is discount received it can have a credit balance.
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Discount Account will always have:a)Only debit balanceb)Nil balancec)O...
Discount Account in Accounting
Discount account is a nominal account in accounting that is used to record the discount offered or received in a transaction. It can be used in both cash and credit transactions. Below are the details regarding the balance of Discount Account.
Debit and Credit Balance
Discount account can have either a debit or credit balance, depending on the nature of the discount offered or received. Here are some scenarios that can lead to debit or credit balance in the Discount Account.
- If a seller offers a cash discount to a customer, it will reduce the sales revenue, and thus, it will be recorded in the Discount Account as a debit balance.
- If a buyer receives a cash discount from a seller, it will reduce the cost of goods sold, and thus, it will be recorded in the Discount Account as a credit balance.
- If a seller offers a trade discount to a customer, it will not affect the sales revenue, but it will reduce the selling price of the goods, and thus, it will be recorded in the Discount Account as a debit balance.
- If a buyer receives a trade discount from a seller, it will not affect the cost of goods sold, but it will reduce the purchase price of the goods, and thus, it will be recorded in the Discount Account as a credit balance.
Conclusion
In conclusion, Discount Account can have either a debit or credit balance, depending on the nature of the discount offered or received. It is a nominal account that is used to record the discounts in a transaction.
Discount account is a nominal account in accounting that is used to record the discount offered or received in a transaction. It can be used in both cash and credit transactions. Below are the details regarding the balance of Discount Account.
Debit and Credit Balance
Discount account can have either a debit or credit balance, depending on the nature of the discount offered or received. Here are some scenarios that can lead to debit or credit balance in the Discount Account.
- If a seller offers a cash discount to a customer, it will reduce the sales revenue, and thus, it will be recorded in the Discount Account as a debit balance.
- If a buyer receives a cash discount from a seller, it will reduce the cost of goods sold, and thus, it will be recorded in the Discount Account as a credit balance.
- If a seller offers a trade discount to a customer, it will not affect the sales revenue, but it will reduce the selling price of the goods, and thus, it will be recorded in the Discount Account as a debit balance.
- If a buyer receives a trade discount from a seller, it will not affect the cost of goods sold, but it will reduce the purchase price of the goods, and thus, it will be recorded in the Discount Account as a credit balance.
Conclusion
In conclusion, Discount Account can have either a debit or credit balance, depending on the nature of the discount offered or received. It is a nominal account that is used to record the discounts in a transaction.
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Discount Account will always have:a)Only debit balanceb)Nil balancec)Only credit balanced)Debit or Credit balanceCorrect answer is option 'D'. Can you explain this answer?
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