Question

Of the approaches to record cash discounts related to accounts receivable, which is more theoretically correct?a. Gross approach.b. Net approach.c. Allowance approach.d. All three approaches are theoretically correct.

Answer 1

which is more theoretically correct?

.b. Net approach

Step-by-step explanation:

To record a payment from the buyer to the seller that involves a cash discount, debit the cash account for the amount paid, debit a sales discounts expense account for the amount of the discount, and credit the account receivable account for the full amount of the invoice being paid