Purchase Discount Definition – What is Purchase Discount?

Accounting Glossary 

Purchase discount definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Purchase discount can be defined as: Term used by a purchaser to describe a cash discount granted to the purchaser for paying within the discount period. Purchase discount is a discount reducing the purchase price. When thinking about purchase discounts we need to keep in mind which side of the transaction we are on. Are we the purchaser receiving a purchase discount or are we the seller granting a purchase discount? This seems obvious and is obvious in real life but it be confusing to know if we are receiving the purchase discount or granting a purchase discount when talking about book problems.