Final answer:
Volume discounts on sales of products are accounted for in the revenue recognition process in accounting. The company needs to determine the amount of discount applicable based on the quantity sold and adjust the revenue accordingly. Accurate tracking and recording of volume discounts is important for proper financial reporting.
Step-by-step explanation:
Volume discounts on sales of products are accounted for in the revenue recognition process in accounting. When a company offers volume discounts, it means that the price per unit decreases as the quantity of units purchased increases. To properly account for volume discounts, the company needs to determine the amount of discount applicable based on the quantity sold and adjust the revenue accordingly.
For example, let's say a company sells a product at $10 per unit. If a customer purchases 10 units, they may receive a 10% volume discount. In this case, the company would recognize the revenue as $90 ([$10 x 10] - [$10 x 10%]).
It's important for companies to accurately track and record volume discounts to ensure that the revenue is properly recognized and reported on the financial statements.