Acca financial Accounting (FA) Study Text ac ca (FA)

Seller perspective 

Therefore, 

in examination questions

, when dealing with transactions from the 

perspective of the seller, it will be stated whether or not a credit customer is 

expected to take advantage of settlement discount terms for the purpose of 

calculating amounts invoiced and due from a customer, and to account for the 

subsequent cash receipt from the customer. The practical consequence of this 

approach is that settlement discount allowed will no longer need to be recorded 

separately as an expense. 

The following illustration shows the accounting requirements relating to 

settlement discounts from the perspective of the seller.