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GCE Financial Accounting 1989 Question 27

Question 27

Cash Book

Trade discount is

  1. A.allowance for prompt payment
  2. B.allowance for damaged goods
  3. C.allowance off price list
  4. D.discount on creditors
  5. E.discount on debtors.
Show the answer and explanation

Answer: C (allowance off price list)

Explanation

Trade discount is a reduction off the list price given to traders; it is not entered in the ledger.