RichardK wrote: »
Discount allowed is considered an EXPENSE of a business. It is the COST of collecting payments more speedily from debtors.
Discounts Allowed appear in the Expenses section of a P&L and therfore do not affect GROSS PROFIT, instead it affects Net Profit.
In this case your Net Profit will be reduced by £100 (10% of £1000=£100)
I hope this helps.
A-Vic wrote: »
Haha more detailed but beat ya to it richard
Miss Dazy wrote: »
If a business offers a discount of 10% on orders of £1000 paid within a week, what would the annual effect be on profit given no other information such as sales volume etc.