Purchase Discount

Purchase Discount

Purchase Discount is an offer from the supplier to the purchaser, to reduce the selling price if the payment is made within a certain period of time. For example, a purchaser brought a $100 item, with a purchase discount term 3/10, net 30. If he pays within 10 days, he will only need to pay $97. If he pays half the amount within 10 days and the rest later, he will need to pay $48.50 during the first payment and $50 during the second payment. Either way, the amount need to be fully paid within 30 days.

In accounting, gross method and net method are used to record these kind of transactions. Under the gross method, the total cost of purchases are credited to accounts payable first, and discounts realized later if the payments were made in time. Under the net method, purchase discounts are realized right away. And if the payments are not made in time, an anti-revenue account name Purchase Discounts Lost is debited to record the lost.

References

1. Intermediate Accounting 8th Canadian Edition, page 439, Kieso, Weygandt, Warfield, Young, Wiecek, John Wiley & Sons Canada, Ltd, 2007, ISBN 978-0-470-83979-9


Wikimedia Foundation. 2010.

Игры ⚽ Нужен реферат?

Look at other dictionaries:

  • Discount Drug Mart — Discount Drug Mart, Inc. Type Private Industry Retail (Discount) / Pharmacy Founded Elyria, Ohio, 1969 Headquarters Medina, Ohio Number of locations 67+ …   Wikipedia

  • purchase — pur·chase 1 vb pur·chased, pur·chas·ing vt 1: to acquire (real property) by means other than descent or inheritance 2: to obtain by paying money or giving other valuable consideration; specif: to take (property) by a voluntary transaction (as a… …   Law dictionary

  • Discount-licensing.com — (formerly known as Disclic) is a Burton upon Trent, UK based vendor or broker of second hand Microsoft software licences. It is notable for being the first company to establish a secondary market in such licences which is accepted by Microsoft as …   Wikipedia

  • Discount Yield — is a measure of a bond s percentage return. Discount yield is most frequently used to calculate the yield on short term bonds and treasury bills sold at a discount. This yield calculation uses a 30 day month and 360 day year to simplify… …   Investment dictionary

  • discount — a deduction made from the normal cost or purchase price. Glossary of Business Terms 1) Quality differences between those standards set for some futures contracts and the quality of the delivered goods. If inferior goods are tendered for delivery …   Financial and business terms

  • Discount — Referring to the selling price of a bond, a price below its par value. Related: premium. The New York Times Financial Glossary * * * ▪ I. discount dis‧count 1 [ˈdɪskaʊnt] noun [countable] 1. COMMERCE a reduction in the cost of goods or services… …   Financial and business terms

  • discount — verb (t) 1. /ˈdɪskaʊnt / (say diskownt) to deduct an amount from the purchase price of (an item): they are discounting refrigerators this week. 2. /ˈdɪskaʊnt / (say diskownt) to purchase or sell (a bill or note) before maturity at a reduction… …  

  • discount — In a general sense, an allowance or deduction made from a gross sum on any account whatever. In a more limited and technical sense, the taking of interest in advance. A deduction from an original price or debt, allowed for paying promptly or in… …   Black's law dictionary

  • discount — In a general sense, an allowance or deduction made from a gross sum on any account whatever. In a more limited and technical sense, the taking of interest in advance. A deduction from an original price or debt, allowed for paying promptly or in… …   Black's law dictionary

  • purchase price — The price of a vehicle that the consumer pays. Start with the MSRP and subtract any manufacturer discount and dealer discount you negotiate. Purchase price is a key determinant of the true cost of a lease. Purchase price less your down payment… …   Dictionary of automotive terms

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”