Opinions On Net Cash Discount Method

Cash discount is a debt deduction provided by an enterprise to encourage customers to pay within a specified time limit.

There are two ways to calculate cash discounts: cash discount total price method and cash discount net price method.

China's tax law requires that the cash discount be accounted for by the total price method.

Cash discount total price method has its advantages and disadvantages.

This article will not discuss this issue, but only on the cash discount net price method.

The cash discount net price method, also known as the cash discount net method, refers to the amount of the amount deducted from the maximum cash discount when the sales business occurs, as the amount of the account receivable.

In this way, the selling party regards the cash discounts of the customers as a normal phenomenon, and thinks that the customers will generally pay in advance, and the amount that the customers will receive more than the discount period will be regarded as providing the proceeds of the credit and reducing the financial cost when the payment is received.

The shortage of 1. and the net cash discount method are not consistent with the provisions of the tax law two.

Cash discount net price method, when sales are realized, deduct the maximum amount of cash discount and increase the receivable and main business income.

This is a departure from the provisions of the main business revenue that the cash discount stipulated in the tax law is fully increased.

The theoretical basis of 2. cash discount is inconsistent with its essence.

Cash discount is a means used by the seller to recover the money as early as possible, and it is a financial behavior of the enterprise.

Therefore, the cash discount should be included in the financial cost, not the main business income.

Three, for the sake of simplicity of cash discount net price method, the improvement of cash discount net price method is illustrated with examples.

Example: a company sells products 10000 yuan, the prescribed cash discount terms are: payment within 10 days, enjoy 2% discount; 20 days of payment, enjoy 1% discount; 30 days of payment, do not enjoy discounts.

The value-added tax rate is 17%.

1., when sales are realized, cash discounts are used as financial expenses.

This is consistent with the requirements of the tax law.

Accounting treatment: Borrowing: accounts receivable 11466 yuan, financial cost 234 yuan; loan: main business income 10000 yuan, should pay tax - should pay VAT (output tax) 1700 yuan.

2. when the customer pays more than the discount period, the amount of cash discounted should be accounted for as the interest income of the loan, while the book value of the accounts receivable should be increased.

For example, when the payment period is more than 10 days, its accounting treatment is: Borrowing: accounts receivable of 117 yuan; loan: financial cost of 117 yuan.

When the payment period exceeds 20 days, the book value of the accounts receivable should be adjusted again until the book value of the accounts receivable reaches the paction amount when the sale is realized.

The advantage of the improved cash discount net price method is four. The 1. meets the requirements of prudence principle.

Cash discount net price method, in accordance with the amount deducted from the maximum cash discount, confirms the seller's creditor's rights - accounts receivable, that is, in the face of uncertain factors - cash discount, the enterprise increases the receivable and main business income after deducting the maximum cash discount.

This does not overestimate the assets of enterprises nor overestimate the profits of enterprises, which conforms to the principle of prudence.

2. realized the ratio between accounts receivable and receivables.

Under the net cash discount method, accounts receivable are first accounted for by deducting the maximum amount of cash discount. Then, with the extension of the collection period, the book value of accounts receivable is adjusted one by one.

This realized the reasonable ratio between accounts receivable and receivables.

Through comparison and analysis, we can see that cash discount is calculated by net price method, which is more advantageous to enterprises.

At present, the reason why China does not adopt the cash discount net price method is that if the accounts receivable are measured by the cash discount net method, it is necessary to rely on the professional judgment of the accountants to estimate the future cash discounts in advance.

According to our current accounting professional level, it is difficult to achieve this.

With the improvement of the professional quality of Accountants in China, the cash discount net price method will become the preferred method of cash discount accounting.