Page 72 - F3 -FA Integrated Workbook STUDENT 2018-19
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Chapter 5
2.3 Accounting for discounts – settlement discounts
Settlement discounts are also referred to as ‘cash discounts’ or ‘prompt
payment discounts’. Note that whilst they may encourage a customer to pay
early, a seller cannot force a customer to pay for goods earlier than they
have previously agreed.
When offered a discount from a supplier – This type of discount is referred to
as discount received and is a form of income.
When offering a discount to a customer – This type of discount is referred to
as discount allowed and is adjusted against sales revenue.
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