13 February 2009
AS-2 Valuation of inventory states that while determining the cost of the inventory trade discount, rebates, etc. is deducted to arrive at the cost. However, cash discount is not included. It states that cash discount is to be shown as an income in the P&L statement. Why is this so?
13 February 2009
Cash Discount is received on account of early payment which is a financial matter and source of income and hence to be excluded from valuation of inventory.
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