Cash discount is often recorded on?

A. the debit side of the cash book
B. the credit side of the cash book
C. the folio column of the cash book
D. both credit and debit side of the cash book

Correct Answer:

Option D – both credit and debit side of the cash book

Explanation

A cash discount is a deduction allowed by some sellers of goods or by some providers of services in order to motivate customers to pay within a specified time. It will be recorded on the debit and credit side of the cash book. Recall the three column cashbook has the cash, bank and discount columns. The debit side of the discount will record cash discount received while the credit side will record discount allowed