Accounting for Cash Payments

• The original price of an item before any discounts.

• List Price

• Purchase Price

• Trade Price

• Invoice Amount

• A reduction in price offered by suppliers to encourage purchases; not recorded in the journal, only the net price is.

• Purchase Discount

• Trade Discount

• Cash Discount

• Rebate

The price after deducting a trade discount.

• Net Price

• Invoice Amount

• Trade Discount

• Purchase Price

An accounting concept stating that assets and services should be recorded at their actual cost at the time of purchase.

• Objective Evidence

• Realization of Revenue

• Historical Cost

• Business Entity

The time frame in which a purchases discount may be taken (e.g., within 10 days).

• Sale Period

• Terms of Sale

• Due Date

• Discount Period

Indicates a 2% discount is available if payment is made within 10 days; otherwise, the full amount is due in 30 days.

• Terms of Sale

• 2/10, n/30

• 2/10/30

A discount received for paying within the discount period.

• Cash Discount

• Trade Discount

• Rebate

• Purchase Discount

An account that reduces the balance of a related account; Purchases Discount reduces the total cost of purchases.

• Cost of Goods Sold

• Asset

• Contra Account

• Permanent Account

The maximum amount a business is allowed to owe a vendor at one time.

• liability

• credit allowance

• maximum allowance

• credit limit

A list of all vendor accounts and their balances that shows the total amount owed to all creditors.

• Schedule of Accounts Receivable

• Schedule of Accounts Payable

• Cash Flow Statement

• Statement of Accounts Receivable