What is sales discounts account, Accounting Basics

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Q. What is Sales Discounts account?

The Sales Discounts account is the contra revenue account to the Sales account. In the income statement the seller deducts this contra revenue account from gross sales. Sellers utilize the Sales Discounts account relatively than directly reducing the Sales account so management is able to examine the sales discounts figure to evaluate the company's sales discount policy. Note that the Sales Discounts account isn't an expense incurred in generating revenue. Relatively the purpose of the account is to reduce recorded revenue to the amount actually realized from the sale.


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