When discount is allowed, the accounting entry is debit discount allowed account and credit ____ account
- suspense
- expense
- creditor
-
debtor
The correct answer is: D
Explanation
The accounting entry is to debit the discount allowed account and credit the debtor account.
Discount Allowed: This account represents the reduction in the selling price of goods or services offered to a customer, typically in exchange for prompt payment or large purchases. Since it reduces the business's revenue, it's debited as an expense.
Debtor: This account represents the amount owed by a customer to the business for goods or services purchase on credit. When a discount is allowed, the customer's outstanding debt is reduced, so the debtor account is credited.