A sales discount does not
A) provide the purchaser with a cash saving.
B) reduce the amount of cash received from a credit sale.
C) increase a contra-revenue account.
D) increase an operating expense account.

Question

Quizplus · Accepted Answer

A sales discount is a reduction in the price of a product that is usually offered to customers who pay their bills within a certain period. Since the discount reduces the total revenue received from a credit sale, it decreases the recorded amount in revenue or sales accounts. It also increases the amount recorded in a contra-revenue account, which is a negative revenue account that reduces the balance in a revenue account. However, it does not increase an operating expense account, as the expense account represents costs incurred in generating revenue, such as cost of goods sold, salaries, and rent.

A Sales Discount Does Not