Answer: a.) Allowance for discounts is debited for the amount of the discounts taken
Explanation:
The Government provides an allowance for discounts (like an allowance for uncollectibles in firms) which is recorded in an Allowance for Discounts account and thus accounts for discounts allowed to taxpayers by the government.
When a discount is allowed, that figure is debited to the Allowance account to show that the allowance allowed has been reduced by the discount given to the taxpayer.
