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Question

When a discount is given to the customers, it is a  to the business entity and the value of capital will  in the accounting equation.


A
gain
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B
loss
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C
increase
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D
decrease
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E
not change
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Solution

The correct options are
B loss
D decrease
When a discount is given to the customers, it is a loss to the business entity as they are receiving a lesser amount than the amount receivable. Since it is a loss, the value of capital will decrease in the accounting equation.

Accountancy

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