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A sole trader has not yet accounted for a discount receieved of $350. When she posts the correct double entry, which one of the following statements is true?
Gross profit will be unaffected and net profit will increase by $350.Sir shouldnt the answer be other way round? Net profit means every other expense is subtracted from it..sir please clear my concept..i am confused!!!
Assuming that the discount received is a discount for early payment, then the answer is correct.
The gross profit is the difference between the sales and the cost of sales. The net profit is after dealing with other expenses and income (including the income of the discount received).
I do explain this in my free lectures. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
On 1 January 2013 a business had net assets of $25,000 On 31 January 2013, net assets amounted to £23,000. A loss of $7,000 had been made and the owner withdrew $1,000 to live on.
What additional capital was introduced to the business in January?
???So sir net sales? And gross sales? What is the difference between them? Net means discount is deducted from it?
mujawarali: There is no point in simply setting me a test question and expecting me to provide an answer. You must have an answer in the same book in which you found the question and so you should ask about whatever it is in the answer that you are not clear about – then I will help you.
I assume, obviously, that you have watched my free lectures on the accounting equation? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.Yusra97: This is nothing to do with your original question which was about discounts received. You receive discounts from suppliers and are nothing to do with sales.
In future, please start a new thread when you are asking about something different.
Net sales are sales less returns (and less any discounts allowed).
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