802 – Cash Discount Earned

Additions to Income

Synopsis

Account 802

Debits

Credits

 

  1. Discounts earned as a result of timely payment of vendor invoices.

 

Remarks:

Taking cash discounts offered by vendors is a good financial management practice for the retailer.

Retailers should make a list of vendors offering early payment discounts and establish procedures internally to take advantage of these discounts if it makes sense for  the company and internal controls.