With net selling price, discount allowed is taken into account; therefore the final price (money) which can be received for goods or services rendered in a specific transaction
In the example we see that as soon as discount is involved in the selling price, we must further distinguish between gross selling price and net selling price. The net selling price therefore indicates that it is the final price that is received, namely the Net or “final” selling price.
With the purchase price it is important to determine whether it is the price charged for an item or whether it is the price it was purchased at. The two “purchase prices” can differ if discount is involved.
The discount or reduction received on the purchase price of an item is known as discount received. This could be cash or quantity discount received at the time of the transaction and does not include settlement discount.
Discount received is taken into account to determine the net purchase price, therefore the final price (money) paid for goods or services rendered.
In the example we see that as soon as discount is involved in the purchase price, we must distinguish further between Gross purchase price and Net purchase price. The net purchase price therefore shows that it is the final price paid, viz. Net or “final” purchase price. The price, which the supplier charges is also referred to as the “net invoice price” after discount received has been taken into account.