Question

Define the following terms.

i.) Bad Debts
ii.) Insolvent
iii.) Solvent
iv.) Discount
↓
→ a) Trade Discount
→ b.) Cash Discount

Answer 1

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$\mathfrak{\blue{Q.}}$Define the following terms.

i.) Bad Debts
ii.) Insolvent
iii.) Solvent
iv.) Discount
↓
→ a) Trade Discount
→ b.) Cash Discount

$\mathfrak{\blue{Ans.}}$ ↓↓

$\mathfrak{\green{i.)\:Bad\:Debts\::-}}$ It is the amount that has become irrecoverable from a debtor. It is a business loss and is debited to profit and loss account is an expense.

$\mathfrak{\green{ii.)\: Insolvent\::-}}$ A person or an enterprise which is not in a position to pay its debts is called in insolvent.

$\mathfrak{\green{iii.)\:Solvent\::-}}$ A person or an enterprise which is in a position to pay its debts is called solvent.

$\mathfrak{\green{iv.)\: Discount\::-}}$ it is a rebate or an allowances given by the seller to the buyer.

There are two types of discounts •--»

$\mathfrak{\green{a.)\:Trade\: Discount\::-}}$ When discount is allowed by a seller to its customer at a fixed percentage on the list or catalogue price of the goods then it is called trade discount.

$\mathfrak{\green{b.)\:Cash\: Discount\::-}}$ when discount allowed to the customer for making prompt payment then it is called cash discount.

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Answer 2

Hey mate ^_^

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Answer:
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i) Bad Debts: Bad-debts refers to the amount that becomes irrecoverable from the debtors.

ii) Insolvent: An insolvent is a person who is unable to pay their debts or money owed. Such a situation where a person is bankrupt and declared insolvent is insolvency.   

iii) Solvent: Some people look to a company's working capital in deciding whether a company is solvent.

iv) Discount: Deduction from the face amount of an invoice, made in advance of its payment.

a) Trade discount: It is allowed when goods are purchase or sold.

b) Cash discount: It is allowed at the time of payment.

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