Treatment of cash discount
This query is : Resolved
08 June 2012
dear expert,
kindly tell me the accounting treatment of cash discount received and its impact on input input vat payment?
kindly tell me the accounting treatment of cash discount received and its impact on input input vat payment?
08 June 2012
You need not account for cash discount received unless you have actually received it in cash separate from the invoice raised on you by the supplier.In that case you may show this as other income.
Normally cash discount is reflected in the invoice itself by the supplier and the VAT is charged on the amount net off cash discount.Here no requirement is there for adjusting input VAT . If the supplier has given you CD on a credit note raised on you,he may have also mentioned the VAT effect thereon which you need to account for by debiting Input VAT account.
Normally cash discount is reflected in the invoice itself by the supplier and the VAT is charged on the amount net off cash discount.Here no requirement is there for adjusting input VAT . If the supplier has given you CD on a credit note raised on you,he may have also mentioned the VAT effect thereon which you need to account for by debiting Input VAT account.
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