If discounts are taken for early payment, _______.
A)purchase discounts are deferred when recording the cash disbursement
B)purchase discounts are recorded when recording the cash disbursement
C)accounts receivable should be debited for the amount of the discount
D)accounts payable should be credited for the amount of the discount

Question

Quizplus · Accepted Answer

Purchase discounts are recorded when recording the cash disbursement. This is because the discount is taken at the time of payment and reduces the amount paid. Therefore, the discount should be recorded at the time of payment when the accounts payable are reduced. Choices A, C, and D are incorrect as they do not properly reflect the treatment of purchase discounts.

If Discounts Are Taken for Early Payment, _______