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WAEC Financial Accounting 1993 Question 2

Question 2

Cash Book

Which of the following is true of trade discounts?

  1. A.They are recorded in the ledger only
  2. B.They are not different from cash discounts
  3. C.They are recorded in the Journals only
  4. D.They are recorded in ledgers and Journals
  5. E.Each discount receives double entries.
Show the answer and explanation

Answer: C (They are recorded in the Journals only)

Explanation

Trade discount is deducted on the invoice and day book (journal); it is never posted to a ledger account.