 Hello, in this lecture, we will define cash discount. According to fundamental accounting principles, while 22nd edition, the definition of cash discount is reduction in the price of merchandise granted by a seller to a buyer when payment is made within the discount period. So we're talking about a discount, which is a reduction in price on the purchase of the merchandise. Reason for the reduction of price is because it was paid within a certain time that time period being set up so that it can generally increase the cash flow of a business. For example, we might have a sale with a term such as this often put in this format where we say it's 2 slash 10 in 30 meaning we'll give a 2% discount if it's paid within 10 days, otherwise it's paid within 30 days. Typically then, we would put the sale on the books for the full price, if the full sticker price in this case was the 8,450 expecting payments within the 30 days. But if then the payment is received within the discounted time period, then we would have to account for the discount. And when that happened, then we would say that the IOU, basically the AR that we put on the books for the entire sticker price, 8,450 will basically go down because now we're going to be giving a discount. And it will mean that the cash that we will receive will be less. It'll be after that discounted amount at the time that we receive the cash. And it also means that the net income will go down as well because we originally recorded the sale at the full sales price. And obviously, we're not going to get the full sales price at this time, we're going to have the discount reducing that sales price. So basically, AR would go down at that point. And the sales discount would go up, which is a contra sales account, which would bring net income down at the point in time payment was received if received within the discounted time period, which in this case is 10 days.