Discount allowed is a kind of deduction from account receivable. It is a reduction in the amount of money that a seller expects to collect from a buyer. This can happen for a variety of reasons, such as when the buyer pays early or when the seller has a sale. Discount allowed is recorded in the seller’s accounts as a reduction in accounts receivable.
Account payable is a liability account that represents the amount of money that a company owes to its suppliers. Cash account is an asset account that represents the amount of cash that a company has on hand. Discount account is a contra-asset account that represents the amount of money that a company has received in discounts from its suppliers.
Here is a table that summarizes the differences between the four options:
| Option | Description |
|—|—|
| Account payable | A liability account that represents the amount of money that a company owes to its suppliers. |
| Account receivable | An asset account that represents the amount of money that a company is owed by its customers. |
| Cash account | An asset account that represents the amount of cash that a company has on hand. |
| Discount account | A contra-asset account that represents the amount of money that a company has received in discounts from its suppliers. |
I hope this helps! Let me know if you have any other questions.