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A government allows discounts on taxes if payments are made within two months of the levy date. How does the government account for the discounts as they are being taken
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A government allows discounts on taxes if payments are made within two months of the levy date. How does the government account for the discounts as they are being taken

User Keith Langmead
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Answer: a.) Allowance for discounts is debited for the amount of the discounts taken

Step-by-step explanation:

The Government provides an allowance for discounts (like an allowance for uncollectibles in firms) which is recorded in an Allowance for Discounts account and thus accounts for discounts allowed to taxpayers by the government.

When a discount is allowed, that figure is debited to the Allowance account to show that the allowance allowed has been reduced by the discount given to the taxpayer.

User Balthazar Rouberol
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