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It is under management accounting.
Basically sales discount are of 2 types,:- trade discount and cash discount. It's either booked in gross sales presentation type or net sales in presentation. It depends on the amount they carry for a period. And the management requires in its reports for its materiality.
It mainly use in Income statement with net sales,gross sales,cash,sales discount
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When a payment arrives with a recognized sales discount, recording it accurately is essential. The amount paid on the invoice is recognized as revenue, while the discount amount is posted to a sales discount ledger account. The entry reflects a debit to "Cash" and "Sales Discounts" with a credit to "Accounts Receivable."
it depends on where you stand. if you initiate the sales, it is a contra account of your Sales. if you are a buyer, the amount of discount you get is a contract account of your purchase. this is in a trading type business.
Discounts may be offered on sales of goods to attract buyers. Discounts may be classified into two types:Trade Discounts: offered at the time of purchase for example when goods are purchased in bulk or to retain loyal customers.Cash Discount: offered to customers as an incentive for timely payment of their liabilities in respect of credit purchases.
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