Is purchase discount an asset or liability?

Question

1.49K viewsMarch 29, 2021Accounting

0

Lynch December 2, 2012 0 Comments

How should I account for purchase discounts? It is an asset, a liability or is it only posted in the income statement to reduce the purchase price?

2 Answers

score 0 · Answer 1 · 2012-12-02T16:42:09+00:00

Purchase discount is a contra account which exists to reduce the purchases. The purchase discount account effectively reduces the payable balance (debit accounts payable) and also reduces purchases (credit purchases).

score 0 · Answer 2 · 2013-05-04T18:16:25+00:00

It’s deducted from the cost of sales (a credit) and it’s an asset if you are still waiting to receive it.