** Cash discounts reduce the amount to be paid if remittance is made within a specified short period of time
Often called sales discounts, represent reductions not in the selling price of a good or service but in the amount to be paid by a credit customer if paid within a specified period of time. Intended for quick payment.
- The gross method views cash discounts not taken as part of sales revenue.
- The Net Method considers sales revenue to be the net amount, after discount, and any discounts not taken by the customer as interest revenue.
Discounts not taken are included in sales revenue using the gross method and interest revenue using the net method.