Accounting Dictionary - Accounting Term

Sales Discounts

Sales discounts are discounts provided by the seller for early payment of the debt for the goods supplied or services provided.

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

  • D - percentage of the discount,

  • X - number of days during which customer 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 from the customer and the amount of cash received is accounted for as Sales Discounts, which represent expenses for the business.

 

 

 

 

 

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