In a three-column cash book, the total of the discount allowed column is posted to which account?
Correct answer: A. The debit of discount allowed account
- A. The debit of discount allowed account
- B. The credit of discount allowed account
- C. The debit of discount received account
- D. The credit of discount received account
Explanation
Discount allowed is an expense or loss to the business, so its account receives a debit entry. Discount received is the opposite concept and is credited as an income or gain.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
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