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Financial & Managerial Accounting
Found in: Page 205
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

What is the difference between a sales discount and a purchases discount?

The difference between the sales and purchase discounts is based on the person reporting the discount.

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Step by Step Solution

Definition of Discount

A discount can be defined as reducing the price of the product or service offered. It is reported as an expense by the seller and benefit by the buyer.

Difference between sales discount and purchase discount

Sales discount is reported by the supplier as an expense because it reduces the benefits generated from the sales.

On the other hand, a purchase discount is reported by the buyer as income because it reduces the expenses of the business entity.

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