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Discount on creditors
Is there possibility in any way to create " Discount on creditors "?
Krishna murthy
Replies (6)
Please clear the query.... as it is not understandable.....
It is common practice to create reserves against profits on Debtors as provision for bad and doubtful debts according to conservatism principle.
But in some books they creates reserve for discount on creditors also;
Is it right way?
Hi Krishnamoorthy.
As per the basic accounting conservatism concept, all anticipated future losses needs to be accounted. However, incomes are accounted only when they are accrued or when there is a surety that the said income would be realized. In your case, discount received from creditors can be accounted only when the actual discount has been received from the creditor. Creating a reserve for discount on creditors does not hold good, thus violating the priciple of conservatism. Correct me if I am wrong.
Agree with Mr.Kaushik
I also agrees with Mr.Koushik;
But in CMA-Inter, Financial accounting Paper-5 , pg.no.5.78, para:5.3.4 provision for discount on creditors, given.
That's why I asked
You may read on line
Www.icmai.in/ students/study materials/Paper-5
Thanks for your response
I also agrees with Mr.Koushik;
But in CMA-Inter, Financial accounting Paper-5 , pg.no.5.78, para:5.3.4 provision for discount on creditors, given.
That's why I asked
You may read on line
Www.icmai.in/ students/study materials/Paper-5
Thanks for your response
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