In accounting terms, what represents a discount that a seller allows buyers?

In accounting terms, what represents a discount that a seller allows buyers?

• A. Sales return
• B. Sales allowance
• C. Discount allowed
• D. Sales incentive

Answer: (C)

The correct choice is a discount allowed because it directly refers to a reduction in the selling price that a seller permits for a buyer. This accounting term is specifically used to denote a decrease in the invoice or bill amount, typically as an incentive for quick payment or bulk purchases. When a discount is allowed, it is recorded in the seller's accounting records as a reduction of revenue, which ultimately affects the net sales figures. In contrast, the other terms do not encapsulate the same concept. A sales return refers to merchandise that a buyer returns to the seller, reflecting a reversal of the sale rather than a mere discount. A sales allowance represents a concession granted to a customer, usually when goods are damaged or not as described, but it still usually implies that the transaction has occurred and is often treated differently in financial records. A sales incentive is more about the promotional aspects of how sellers can encourage sales, which may not specifically involve a direct discount on the price. Thus, the term discount allowed is the most precise and relevant answer in accounting for a discount provided by a seller to a buyer.

The correct choice is a discount allowed because it directly refers to a reduction in the selling price that a seller permits for a buyer. This accounting term is specifically used to denote a decrease in the invoice or bill amount, typically as an incentive for quick payment or bulk purchases. When a discount is allowed, it is recorded in the seller's accounting records as a reduction of revenue, which ultimately affects the net sales figures.

In contrast, the other terms do not encapsulate the same concept. A sales return refers to merchandise that a buyer returns to the seller, reflecting a reversal of the sale rather than a mere discount. A sales allowance represents a concession granted to a customer, usually when goods are damaged or not as described, but it still usually implies that the transaction has occurred and is often treated differently in financial records. A sales incentive is more about the promotional aspects of how sellers can encourage sales, which may not specifically involve a direct discount on the price. Thus, the term discount allowed is the most precise and relevant answer in accounting for a discount provided by a seller to a buyer.