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What is a provision for discounts allowable? | AccountingCoach

What is a provision for discounts allowable? The provision for discounts allowable is likely to be a balance sheet account that serves to reduce the asset account Accounts Receivable.The provision account's counter part (remember double entry accounting) is an income statement account, such as Sales Discounts or Discounts for xxx.. Let me give you an example from the meat industry.

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How is a voucher used in accounts payable? | AccountingCoach

How is a voucher used in accounts payable? Definition of Voucher. A voucher is often a prenumbered form used in the accounts payable department to standardize and enhance a company's internal control over payments to its vendors and service providers.. Example of a Voucher. You could think of the voucher used in accounts payable as a cover sheet to which necessary supporting documents and

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Are sales discounts reported as an expense? | AccountingCoach

Definition of Sales Discounts Sales discounts are also known as cash discounts or early payment discounts. Sales discounts (along with sales returns and allowances) are deducted from gross sales to arrive at the company's net sales. Hence, the general ledger account Sales Discounts is a contra re

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What is the tax advantage when bonds are issued instead of

What is the tax advantage when bonds are issued instead of stock? The tax advantage of issuing bonds (or other debt) instead of stock results from the interest paid by the company being a deductible expense on its federal and state income tax returns. Dividends paid to stockholders are not a deductible expense, since dividends are a distribution of profits to the owners of the corporation.

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What is the difference between an invoice and a voucher

What is the difference between an invoice and a voucher? Definition of an Invoice. An invoice received from a vendor is a billing for goods or services that it had provided. The vendor's invoice will include the quantities of the items provided, brief descriptions, unit prices, amount due, credit terms, where to remit payment, etc.

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What is a trade discount? | AccountingCoach

Definition of Trade Discount A trade discount is a routine reduction from the regular, established price of a product. The use of trade discounts allows a company to vary the final price based on each customer's volume or status. Note that trade discounts are different from early-payment discount

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What should be the entry when goods are purchased at a

Definition of Goods Purchased at a Discount There are two common types of discounts for companies buying goods to resell: Trade discount Early payment discount Examples of Entries for Goods Purchased at a Discount Trade discount. Some suppliers have catalogs with prices before any discounts. Let'

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Calculating the Present Value of a 9% Bond in an 8% Market

Let's use the following formula to compute the present value of the maturity amount only of the bond described above. The maturity amount, which occurs at the end of the 10th six-month period, is represented by "FV" .The present value of $67,600 tells us that an investor requiring an 8% per year return compounded semiannually would be willing to invest $67,600 in return for a single receipt of

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Where is a contingent liability recorded? | AccountingCoach

Where is a contingent liability recorded? Recording a Contingent Liability. A potential or contingent liability that is both probable and the amount can be estimated is recorded as 1) an expense or loss on the income statement, and 2) a liability on the balance sheet.. Disclosing a Contingent Liability. A loss contingency which is possible but not probable will not be recorded in the accounts

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Why does a bond's price decrease when interest rates

Definition of Bond's Price A bond's price is the present value of the following future cash amounts: The cash interest payments that occur every six months, plus The lump sum cash amount that occurs when the bond matures Typically, a bond's future cash payments will not change, but the market int

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