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Why we have to record discount received

Ks (Ac) (138 Points)

07 May 2022

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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4 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14219 Points)
Replied 07 May 2022

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 .

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 07 May 2022

True and Fair view of Financial Statements.

Atharv Sankliya (1306 Points)
Replied 07 May 2022

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