Question

Imagine you are an accountant of ABC Industries. You have to pass an entry of discount allowed by the company. What will be the accounting treatment?

Options

• Debit side of trading a/c

• Credit side of trading a/c

• Debit side of profit and loss a/c

• Credit side of profit and loss a/c

Answer 1

Debit side of profit and loss a/c

Explanation:

Discount allowed is an expense (it reduces profit), and expenses are recorded on the debit side of the Profit & Loss Account, so discount allowed is debited.