Thursday, May 24, 2007

Accounting principles

On a conceptual basis, should purchase discounts be treated as a revenue or as a contra-expense (reduction of purchases/cost of sales/ inventory)?

8 Comments:

Blogger Rup said...

It should NOT be treated as a revenue but as an expense. Rup

10:46 PM  
Blogger Jamal said...

Its basically revenue according to its nature.

7:01 AM  
Blogger L said...

Hi,

The discount that you get upon buying an item should be adjusted against the purchasing cost. Hence if it is an inventory item, the cost of inventory should be deducted to the extent of purchase discount.

Regards

9:39 AM  
Anonymous kris said...

Hi,

If you take it as a revenue, then it should reflect in the income statement.

Some do not record the discount depending on the situation.

It seems to me, in your case, it is contra expense.

I am a programmer. So, you can verify.

6:30 AM  
Blogger Dr. T said...

I agree, if it is a revenue, then it should reflect in the income statement.

5:46 AM  
Anonymous Indiancareerclub said...

Purchase discount is usually treated as expense, as purchases of goods..

7:12 AM  
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9:02 PM  
Anonymous Anonymous said...

this absltly a revenue coz wen we buy something 4 resale that is revenue.

9:49 AM  

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