Yowell Company granted a sales discount of $360 to a customer when it collected the amount due on account. Yowell uses the perpetual inventory system. Which of the following answers reflects the effects on the financial statements of only the discount?

Question

Quizplus · Accepted Answer

Yowell will reduce its assets (accounts receivable) and equity (sales revenue) when it grants the sales discount. The discount itself does not affect the statement of cash flows. However, cash flows will be affected when the payment is recorded.

Yowell Company Granted a Sales Discount of $360 to a Customer