Accounting Dictionary - Accounting Concepts

Purchase Discounts

Purchase Discounts are discounts taken by the purchaser for early payment of the amount due.

Conditions are usually expressed in the following way: D/X, n/Y, where

  • D - percentage of the discount,

  • X - number of days during which purchaser will have to pay its debt to get a discount,

  • n/Y – normal payment period.

Therefore is debt is paid earlier, lower amount must be paid and the difference between debt to the supplier and the amount paid is accounted for as Purchase Discounts.

 

 

 

 

 

 

 

 

 

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