Hi everyone,
Can I ask why you cannot say that a discount expense is an expense that is in the form of a decrease in Bank? Why is it a decrease in Debtors Control? i.e. when we receive less money from our debtors (due to the discount), aren't we receiving less cash and thus Bank should decrease? What's the concept behind understanding why this cannot be the case and that the correct answer is Debtors Control.
It’s just a little perplexing to understand because when a receipt from a debtor (who has been entitled to a discount for early payment) is recorded in the CRJ, the Debtors Control column amount stays the same (because you have to clear the total amount), but it is the Bank column amount that decreases (as less cash is received by the business). Any comments on this to further expand my insight onto this would be greatly appreciated, thanks.