Cash Discounts

These are such deductions made in both accounts receivable and accounts payable at a particular period of time of settlement. Cash discount may be allowed by the seller if such goods are to paid for within a specified period of time. One can either say that it is a deduction made by a seller to the buyer if the buyer agrees to make a payment within the stated period demanded by the seller or because of the fact that the buyer promised to pay promptly.

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