Dear all,
our client has debited their creditors accounts for the cash discounts as well as trade discounts which is shown in the accounts under the head of indirect income, my query is whether the accounting treatment correct or any principle of accounting is deviated ?,kindly suggest the correct treatment.
For e.g.
1.Bill booked for purchase Rs.1000000 in august
2.debit note recd from creditor in sep. towards disc. rs. 100000
3.entry for disc on above date
creditors a/c ......Dr. 100000
to Disc. Recd a/c (cash/trade disc.) 100000
Whether its correct ??
CAclubindia
