Group present

An Binh Nguyen 4256012

Discussion question 4

1. what is a cash discount? A cash discount is a discount which allowed by the seller and received by the buyer.Therefore cash discount called by settlement discount.
From the seller's perspective: represent a reduction in the selling price and therefore should be deducted from sales revenue to determine net sales. b. the purpose of offering cash discounts is to encourage early payment.The earlier payment may tend to decrease losses from uncollectible accounts receivable
a.

entitles buyers to deduct a specified percentage of the sales price if payment is made within a given time span, the discount period.

Differences between trade discount and cash discount

Trade discount 1. is a percentage reduction granted to a customers from the normal list price 2. Is not related to early payment but is used in determining the actual invoice price to the custome 3. enable the business to print one price list but nevertheless vary prices in dealing with the different customers

Cash discount

1.

2. 3.

is specified percentage of the sales price if payment is made within a given time frame. Related stricly to early payment there is no price list needed

What is GST?
1. Under GST legislation, retail businesses have to register for Australian Business Number (ABN) and hence GST if their gross taxable supplies (sales of goods) exceed 75000 per year. 2. The importance of paying creditors' accounts within the discount period is: discount offered unless the entity have a more profitable use for the discount money foregone