20-10-2014
Discount: Discount is the reduction in the price of product due to Bulk quantity or Personal relation.
Trade Discount:
1. Trade discount is expressed in the form of %.
2. Trade discount is only on cash transaction.
3. Trade discount having no Accounting record.
Cash Discount:
1. Cash discount is expressed in the form of 2/10, n/30 (2/10, n/30 it mean total day for payment is 30 but if we pay all the payment before 10 days than we get 2% discount) or (5/30, n/60 it mean total day for payment is 60 but if buyer pay the payment before the 30 days than we allow 5% discount to him.
2. Cash discount is only on credit transaction.
3. Having evolved in the Accounting record because if u doesn’t mention the amount of the payment discount & time period then we can’t get exacts value of amount that we pay or received.
Assets: All the economic resources of business for the operation of purchases to support a business.
Liabilities: All the things which may be payable for the obligation of the business such as loan.
Expenses: All the things or cost which we avail and not further useful for operating business. They have no economic value.
Revenue: All the Profit which we retain from the business including expenses is generally knows as revenue.
Net income: All the net profit which we retain from the business without including expenses is generally knows as net income.
Capital <=====> Business <=====> Drawing
Capital: Money and money worth which use or operate business is knows as capital.
Drawing: The money or money worth which draw from the business for the purpose of personal use is knows as drawing.
Creditors <=====> Business <=====> Debtors
Creditors: Such persons from which we received money, products, loan, or any other economically help.
Debtors: Such persons for which we allow money, products, loan, or any other economically help.
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