Discounts allowed is charged to

Assessment: WAEC SSCE - Financial Accounting - 2002 (Objective) Subject: Financial Accounting

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Discounts allowed is charged to
Answer Details
Discounts allowed is charged to the profit and loss account. This is because discounts allowed are considered as an expense of the business and are deducted from the gross sales revenue to arrive at the net sales revenue. The net sales revenue is then used to calculate the gross profit, which is a key component of the profit and loss account. Therefore, discounts allowed reduce the profit of the business and are shown as an expense in the profit and loss account.
Read lesson note on Nature And Significance Of Accounting (JAMB)
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