Accounting Lecture 07 Part II - Inventory Sales and the Income Statement

[AccountingTutor]

Hi, ranaking100. This is because a discount received after recording the purchase means that less will be paid for the inventory than we first recorded. Assets are recorded at cost, so we will have to reduce the balance in the inventory account when a discount is granted.

[ranaking100]

sir i just don't understand that why should the inventory account be credited while recording the discount obtained by the merchant through purchase of inventory items?