How do you apply a discount to a customer invoice or via a discount item?

• A. Increase the invoice total by the discount amount.
• B. Add a discount item/line on the invoice or issue a credit memo for the discount amount; ensure it updates the total.
• C. Create a separate revenue item for the discount.
• D. Remove the discount after the invoice is issued.

Answer: (B)

Discounts should reduce what the customer owes, not add to it. The best way to apply a discount is to add a discount item as a separate line on the invoice (or issue a credit memo for the discount amount and apply it to the invoice). This makes the discount visible on the bill and lowers the total due, with tax calculated on the discounted amount. It also keeps revenue reporting clean because the discount is recorded as a deduction rather than as extra income. Using a separate revenue item for the discount would misstate revenue, and removing the discount after the invoice is issued would leave the customer with an unnecessary higher balance.