The reason for creation of provision for disount on debtors is to fulfil concept.

objectivity

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prudence

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materiality

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going concern

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Solution

The correct option is B prudence
Prudence is an accounting principle that requires recording expenses and liabilities as soon as possible, but the revenues only when they are realized or assured.
Provision for discount on debtors is created to fulfil the concept of prudence or conservatism.

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Similar questions

What is the reason for the creation of a provision for discount on debtors?

Is provision for discount on debtors made before making provision for doubtful debts?

The double effect of Provision for discount on debtors is:

Provision for Discount on Debtors A/c To Debtors A/c	Dr.
Profit & Loss A/c To Provision for Discount on Debtors A/c	Dr.
Provision for Discount on Debtors A/c To Trading A/c	Dr.
Debtors A/c To provision for Discount on Debtors A/c	Dr.

What is meant by provision for discount on debtors?

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