Discounts Received

[NicolaCassidy]

This is a really simple question, but one that has left me doubting my accounting knowledge completely as I ended up having strong words with an accountant over the issue, and I came out feeling small and stupid for questioning it. However, I still believe I am right, as if I am not then my business just went down the toilet.

Basically, I was putting a purchase invoice onto the system and it had a discount on from the supplier. Ignoring VAT for the sake of this question, I put this in purchases and discounts received, only to find that the accountant changed it to discounts allowed (behind my back!).

So who is right? (fingers crossed here)

[Alpha]

Well strictly speaking it is a discount received.

The main question though is why did either of you bother with it.

Normally you would simply post the invoice amount net of the discount so that the only entries are to trade creditors and expense.

Now a settlement discount would need to be accounted for seperately but not an invoice discount.

[NicolaCassidy]

Basically on this account, the client wants a breakdown on discounts allowed and received every quarter so we are having to post it seperately.

I am glad I was right though because this was just one of many mistakes I have noticed being made, and i'm not sure I want to put my name to these accounts that I have only worked 2 days on. Something to go away and think about now.

Thanks anyway