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author's profile photo Former Member
Former Member


hi all,

In which account the discount money goes?/

suppose we have given discount of 10 % on A/R invoice Amount (100).in which account the discount money goes??



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    author's profile photo Former Member
    Former Member
    Posted on Dec 20, 2008 at 01:41 PM


    Create separate GL account for discount payable in expenditure and discount receivable in revenue.

    Go to GL account determination you have to set discount discount payable in sales tab and discount receivable in purchase tab.


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    • Former Member Former Member

      Hi Netu,

      The discount mentioned in the document (A/R Invoice or the AP Invoice) will not effect the ledgers. The fact holds the logic that, lets take it for a customer, you are allowing the discount on the price. This means you are reducing the liability from your margin or cost. So the system creates a liability of the discounted price.

      But when you are recieving the incoming payment and then you allot a discount on the created liability this is treated as your expense and will be posted to the discount allowed account.

      For ex. the inv value is 100 (liability. During the payment posting you give a discount of 10%, termed as cash discount. Then the Rs.10 will be posted in the discount allowed account.

      I hope you understood the fact. When you allow a discount in document it as good as a new price you are alloting to the customer and that should not effect the ledgers as the benifit has not been incurred from your ledgers or cash (whatever you say), to the customer.

      The same stands true in purchase.



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