[GNC] Use of cash discounts in business account tree

[Adrien Monteleone]

I am no accountant, but that doesn't sound quite correct.

If you put the Cash Discounts account under Expenses, then that would be 
a contra-account as it reduces the price of your expenses you pay the 
wholesaler. So that credit is correct, but I don't see that there should 
be a debit to your checking account. It isn't like you received funds in 
return, you just paid less out. So that might look like:

Dr. Expenses:something                   100
   Cr. Expenses:Cash Discounts Received    10
   Cr. Assets:Checking                     90

On the other side, when you are the seller and offer a cash discount, 
that too could be an expense (but this time not contra-balanced) 
however, it might be best *not* to use the same account as above due to 
the potential need to track the discounts you offer being muddled with 
the discounts you receive. As well, there shouldn't be an equal debit to 
Checking here, but rather less money received like so:

Dr. Assets:Checking                     90
Dr. Expenses:Cash Discounts Offered     10
   Cr. Income:Sales                     100

Some texts and accountants might counsel that this Cash Discount account 
should instead be a sub contra-account of Income:Sales as it is really a 
reduction of Sales, rather than an expense, but that would depend on 
your needs, situation, and legal requirements.

*notice - none of the above is specific to GnuCash, thus, this is an 
'accounting question', not 'how do I do this in GnuCash' question.

We're happy to offer *ideas* here on such questions, but *NONE* of those 
ideas are *advice*.


Regards,
Adrien

On 5/15/24 5:25 PM, nisp1953 wrote:
> WHen I get a discount from a wholesaler, then there is a credit to
> Cash discounts,
> which is an expense. There is also a corresponding debit to my
> checking account.
> When I issue a site wide discount there is a debit to the cash
> discount but a credit
> to the checking account. Am I doing that correctly?