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In the Kaplan book, it is stated in Chapter 5
“When preparing the final accounts, discount received is normally netted off against the purchase expense to reduce cost of sales”.
Later in Chapter 17- Preparing basic financial statements- an example for preparing financial statements shows that the discount received is included as a line item after gross profit is calculated.
Is there a discrepancy in how it was dealt with or am I missing something.
It can be done either way – the final profit will be the same.
Obviously you cannot be asked to prepare full financial statements in the exam 🙂
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