Discount Accounting

A discount decreases the price of an item on an invoice. Frappe Books applies discounts to item rows and records them in a discount account. Your income accounts then show the full price, and the discount account shows the discounts.

You can give discounts on sales invoices, purchase invoices, and sales quotes.

Enable Discount Accounting

1. Click Setup > Settings in the sidebar.
2. In the General tab, turn on Enable Discount Accounting.
3. Optional: In Accounts, select the Discount Account.
4. Click Save and click Yes to reload Frappe Books.

The Discount Account must be a ledger account with the root type Income. If you do not select an account, Frappe Books uses the account Discounts. If this account does not exist, Frappe Books makes it.

Give a Discount on an Item

1. Open a draft invoice or quote.
2. Click the Edit row button at the end of the item row.
3. Enter the Discount Percent.
4. Check the Discounted Amount.

To enter an amount instead of a percent, select Set Discount Amount, and then enter the Discount Amount. This amount is for the full row, not for one unit. It cannot be more than the Amount of the row.

The Discount field in Tax and Totals shows the total of all the item discounts. Frappe Books does not have a discount for the whole invoice. To give the same discount on all items, enter it in each row.

A pricing rule or a coupon code can also fill the item discounts. Pricing rules need discount accounting. In the Point of Sale, the cashier can change discounts only when Can Change Discount is on.

Discount Before or After Tax

By default, Frappe Books applies the discount before the tax. It calculates the tax on the amount after the discount.

To apply the discount after the tax, open the Settings tab of the invoice and select Apply Discount After Tax. Frappe Books then calculates the tax on the full amount, and applies the discount to the amount with the tax.

For example, an item has an amount of 1,000.00, a tax of 10%, and a discount amount of 100.00:

Ledger Entries

When you submit an invoice with discounts, Frappe Books posts the item amounts before the discount. It posts the total discount to the discount account. For the example above with the discount before the tax, a sales invoice makes these entries:

A purchase invoice makes the opposite entries. It credits the discount account with the discount. A return reverses the discount entries of the original invoice.