The total of the discount received column in a three-column cash book is posted to which account?
Correct answer: B. Discount received account
- A. Discount allowed account
- B. Discount received account
- C. Cash account
- D. Trade expenses account
Explanation
Discount received is an income or gain for the business, so the discount received account is credited with the total. Discount allowed is a separate expense and is posted from the opposite discount column.
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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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