1- why we have to record discount received instead of this wecan record it at discounted purchase price which concept deal with this
2- a firm have a income from other sources 10 lac rupees and expense to earn this income is 2 lac rupees so why they cannot record their income 8 lac rupees directly ??
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Why we have to record discount received
Replies (4)
Quick Summary
1)Purchase is an expense to the Business on the other hand Discount received is Income to the Business . Can not mixed thoughter and show only Discounted purchase price .
2) As per the law we have to show all expenses incurred to earn profit or Income . Therefore we can not show only Income . To determine correct Income or profit we have to show all expenses incurred .
2) As per the law we have to show all expenses incurred to earn profit or Income . Therefore we can not show only Income . To determine correct Income or profit we have to show all expenses incurred .
True and Fair view of Financial Statements.
Means if a cloth trading firm have car which they uses as cab to earn income expense incurred like petrol and maintenance are recorded inthe books of accounts of cloth trading firm
Purchases less return and trade discounts must be recorded as per companies acts and as standard.
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