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A government allows discounts on taxes if payments are made within two months of the levy date. How does the government account for the discounts as they are being taken? Allowance for discounts is debited for the amount of the discounts taken. Expenditures are debited for the amount of the discounts taken. Revenue is debited for the amount of the discounts taken. Allowance is credited for the discount and is recorded at the time the discount is taken.

A government allows discounts on taxes if payments are made within two months of the levy date. How does the government account for the discounts as they are being taken? Allowance for discounts is debited for the amount of the discounts taken. Expenditures are debited for the amount of the discounts taken. Revenue is debited for the amount of the discounts taken. Allowance is credited for the discount and is recorded at the time the discount is taken.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A government allows discounts on taxes if payments are made within two months of the levy date. How does the government account for the discounts as they are being taken? Allowance for discounts is debited for the amount of the discounts taken. Expenditures are debited for the amount of the discounts taken. Revenue is debited for the amount of the discounts taken. Allowance is credited for the discount and is recorded at the time the discount is taken.
Transcribed Image Text:A government allows discounts on taxes if payments are made within two months of the levy date. How does the government account for the discounts as they are being taken? Allowance for discounts is debited for the amount of the discounts taken. Expenditures are debited for the amount of the discounts taken. Revenue is debited for the amount of the discounts taken. Allowance is credited for the discount and is recorded at the time the discount is taken.
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