Question

An expense resulting from falling to take advantage of cash discounts when using the net method of recording purchases is called?

Answer 1

When purchase discount is availed it is recorded as revenue and credited to purchase discount. In case of net method, the discount is assumed to be have taken and thus purchase discount is credited. However later when the discount is not availed that is payment is not made within the cash discount period then expense is recorded as discount lost which is debited to the extent of discount not availed.

Thus, discount lost expense is recorded when cash discount is not availed.