Purchase Discount
Accounting glossary · Understand, connect, apply
A purchase discount is a reduction offered to a buyer for paying within specified terms, commonly an early-payment discount.
Example
Under terms 2/10, n/30, a qualifying $1,000 balance settled within ten days may be paid for $980.
Remember the difference
Read the terms and eligible base carefully. The buyer’s purchase discount corresponds to the seller’s sales discount.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary