One of the accounting course topics is learning of purchase discounts concept, essence and practical application. It is important to understand this concept and know how to account for discounts when certain purchases are being made. Also this topic covers calculation of discounts and their application conditions.
Essence
Purchase discounts concept is closely related to the accrual accounting principle and accounts payable. Accounts payable are accounted for when business makes purchases on credit, i.e. goods or services are acquired with the postponed cash payment. Supplier and customer agree sales conditions of transaction and payment terms. Payment terms usually determine period within whic
