trade discount

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
ok just done a practice simulation for unit 3 i think its the one with the sales day book, analyising settlement discounts etc and a couple of questions to my fellow aater's<BR><BR>why dont aat record the trade discount - dont they know the trial balance wouldnt balance<BR><BR>when they return goods why dont we reclaim the settlement discount which we gave them ?<BR><BR>sorry but this has been bugging me has anyone else come across this kinda problem ?

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    trade discount

    Hi<BR><BR>Trade discount isn't recorded in the accounts, because it is just a reduction on the price of the original goods which reduces the initial selling/buying price. The amounts entered are the goods value, vat amount and then if it is on credit the whole amount is offset to the control account, therefore you don't need to show how much trade discount was allowed as nothing is reduced after the net price. So, it doesn't have any effect on the Trial Balance at all. It is no different to selling goods to one customer for £10 and entering the invoice onto the system, and then selling goods to another customer for £8, you just enter the invoice amounts onto the system, you do not need to show the trade discount at all.<BR><BR>As for settlement discount on returned goods, when we invoice a customer or a supplier invoices us the invoice total is entered into the accounts, if goods are returned the credit note also contains a settlement discount so it is reclaimed. The credit note is issued exactly as the invoice was, so trade discounts and settlement discounts allowed on the invoice, are also accounted for on the credit note.<BR><BR>Hope this makes sense!<BR><BR>Tracy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    trade discount

    <br><br><< <i>Hi trade discount isn't recorded in the accounts, because it is just a reduction on the price of the original goods which reduces the initial selling/buying price. The amounts entered are the goods value, vat amount and then if it is on credit the whole amount is offset to the control account, therefore you don't need to show how much trade discount was allowed as nothing is reduced after the net price. So, it doesn't have any effect on the Trial Balance at all. It is no different to selling goods to one customer for £10 and entering the invoice onto the system, and then selling goods to another customer for £8, you just enter the invoice amounts onto the system, you do not need to show the trade discount at all.</i> >><br><br> yes i see where your coming from on this one and i think you may be right, but then may i add we would have a weaker record of sales eg sales may appear to be flatter than they actually are if we dont keep any records of trade disc.<BR><BR><br><br><< <i>As for settlement discount on returned goods, when we invoice a customer or a supplier invoices us the invoice total is entered into the accounts, if goods are returned the credit note also contains a settlement discount so it is reclaimed. The credit note is issued exactly as the invoice was, so trade discounts and settlement discounts allowed on the invoice, are also accounted for on the credit note.</i> >><br><br> yeah thanks i have done this but im worried that it wasnt what the examiner was looking for and it might be wrong, but i figured my logic was correct to reclaim the settlement disc<BR><BR>Hope this makes sense!<BR><BR>Tracy<BR><BR>p.s thanks very much tracy i take it you have passed your foundation level then <img src="i/expressions/face-icon-small-smile.gif" border="0"> just one question is it true that the intermediate level is easier than the foundation !
  • System
    System Posts: 100,534 🤖 Admin 🤖
    trade discount

    Hi Blank<BR><BR>I haven't passed Foundation yet, I take my exam in June, but I have enrolled for Intermediate to take the exam in December. Personally I love Intermediate, as it is a lot more interesting and as I do accounts through to year end and financial statements anyway (but on a computer), I am really getting my teeth into the manual aspect of it.<BR><BR>I'm glad my explanation made sense, see what your getting at with your sales regards to recording trade discount, but personally, so long as we sell items for more than we buy them for we are going to make a profit so no need to show any trade discounts.<BR><BR>All the best with your exams.<BR><BR>Take care<BR><BR>Tracy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    trade discount

    thanks tracy, yeah i have had a look at the intermediate papers and acca paper 1.1 and 1.2 (which are a little difficult for me at the mo) the intermediate seemed pretty straight forward to me and nothing that a bit of hard work/revision couldnt solve so im looking forward to that i just hope the simulations arent as much of a wind up as they are at foundation level.<BR><BR>anyway i have my simulation next friday so im hoping all goes well and then june 14th tuesday is the big one by the way do you know what happens if you fail ! will you have to do foundation all over again or can you go on and do intermediate and just do the foundation and intermediate exams next time round<BR><BR>thanks
  • System
    System Posts: 100,534 🤖 Admin 🤖
    trade discount

    Hi<BR><BR>If you fail I believe you can still go up a level as long as your college believes you are capable of achieving the next standard, and that you failed due to something silly etc, ie nerves, illness etc. I know my college sends a list down to the reception stating who it will allow to go straight onto Intermediate for example, if your name is not on the list you have to attend a formal interview from which is determined the best course of action to take, which would most probably involve re-taking the exam in December, and possibly studying towards taking the Intermediate exam in June or Dec of the following year.<BR><BR>It's like everything, they know what you are or aren't capable of, and if they are decent they wouldn't want to put you in for an exam course you are likely to fail, as it doesn't look good on them or the college.<BR><BR>I also don't think you actually need the Foundation level to complete the AAT studies, a lot of people jump straight in at Intermediate level, so as long as everything is completed for Intermediate and Technician you can be "signed off".<BR><BR>All the best with your sim on Friday, I have my Unit 3 one to do still, but no date has been set yet. I know it won't be this Monday, the following is a Bank Holiday, then only 2 more lessons before the exam, so not sure when it will be!! Just hope he doesn't surprise us by doing it this Monday after all, as I have spent all week doing my Portfolio instead of revising.<BR><BR>Take care, and good luck with your exams!<BR><BR>Tracy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    trade discount

    <br><br><< <i>HiIt's like everything, they know what you are or aren't capable of, and if they are decent they wouldn't want to put you in for an exam course you are likely to fail, as it doesn't look good on them or the college.<BR><BR>I also don't think you actually need the Foundation level to complete the AAT studies, a lot of people jump straight in at Intermediate level, so as long as everything is completed for Intermediate and Technician you can be "signed off".<BR><BR>All the best with your sim on Friday, I have my Unit 3 one to do still, but no date has been set yet. I know it won't be this Monday, the following is a Bank Holiday, then only 2 more lessons before the exam, so not sure when it will be!! Just hope he doesn't surprise us by doing it this Monday after all, as I have spent all week doing my Portfolio instead of revising.<BR><BR>Take care, and good luck with your exams!<BR>Tracy</i> >><br><br> yeah i have the same problem, i have my sage exam tomorrow, my unit 2 or 1 on friday, then bank holiday week we are off come back 1 more lesson and the big exam on top of that we still havent received our unit 4 exam either i can only hope it turns up tomorrow <img src="i/expressions/face-icon-small-sad.gif" border="0">. But i was hoping to get everything out of the way at least a week before the exam, the only advice i can give you on unit 3 is the Trial balance wont balance and the following question will address the discrepencies.!<BR><BR>anyway good luck
  • System
    System Posts: 100,534 🤖 Admin 🤖
    trade discount

    Hi<BR><BR>Cheers for your advice on Unit 3, as for the Unit 4 Simulation, this was the unit I was dreading as I don't enjoy costing, but our Sim was so easy it was unbelievable, as long as you can remember the formula for working out the variance you're fine, the rest just needs common sense.<BR><BR>All the best with everything!!<BR><BR>Tracy

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