Ignoring the Discount Received?

📌 CONCEPT: A discount received is a reduction in the price of an item, and it can be of two types - cash discount and invoice discount. Cash discount is given at the time of payment, whereas invoice discount is deducted from the invoice amount before payment.

📐 RULE / FORMULA: The total cost of an item can be calculated by taking into account both the cash discount and invoice discount. The formula to calculate the total cost is: Total Cost = (Invoice Price - Cash Discount) - Invoice Discount.

💡 WORKED EXAMPLE: A firm purchased office stationery worth ₹ 10,000 at a cash discount of 2% and an invoice discount of ₹ 150. Ignoring the invoice discount, the total cost of the stationery is calculated as follows: Total Cost = (₹ 10,000 - (2% of ₹ 10,000)) - ₹ 0 (since invoice discount is ignored) = ₹ 9,800.

⚠️ COMMON MISTAKE: Students often ignore the invoice discount, but it should be taken into account while calculating the total cost of an item.