Professional Services
Early Payment Discount Offered to Client
Offering a 2% discount if the client pays within 10 days of invoice date.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash / Bank (Net Received) | Asset (+) | 9,800.00 | - |
| Sales Discount (Early Payment) | Contra-Revenue (+) | 200.00 | - |
| Accounts Receivable (Invoice Cleared) | Asset (−) | - | 10,000.00 |
💡 Accountant's Note
Early payment discounts are contra-revenue. Using a contra account instead of directly reducing revenue allows management to track the cost of the discount policy. Under IFRS 15, variable consideration (including discounts) must be estimated at contract inception.
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Expert Analysis by Qusai Ahmad
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