Differentiate between earned discounts and unearned discounts? : oracle accounts receivable
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Answer Posted / Sudhish Kumar Singh
1. Earned Discounts: These are given to customers when they meet certain criteria, such as early payment, high volume purchases, or long-term contracts. They are only recorded in the financial statements once the conditions have been met.n
2. Unearned Discounts: These discounts are offered upfront by sellers and are recognized as expenses over time as they become earned. For example, a customer might be given a volume discount on a multi-year contract but will only earn that discount proportionally over the duration of the contract.
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