Rebate definition — AccountingTools (2024)

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Rebate definition — AccountingTools? ›

A rebate is a payment back to a buyer of a portion of the full purchase price of a good or service. This payment is typically triggered by the cumulative amount of purchases made within a certain period of time. Rebates are generally designed to increase the volume of purchases made by customers.

Rebates are a type of sales promotion strategy where a payment is made to the buyer after purchase. Money is returned either as a lump sum or a percentage of the purchase price. From an accounting perspective, rebates are typically treated as a revenue when they are earned, rather than at the time of purchase.

A rebate is, by definition, a sum of money that is paid back to you. You'll most commonly have experienced this in the form of a tax rebate, i.e., a situation in which you have paid too much tax and are due a repayment. A tax rebate can be paid automatically, but you may also be required to go through a refund process.

Definition. A rebate is a deal in which a supplier or vendor offers to return a portion of a customer's purchase price if they buy a certain amount (usually of a specific product) in units or dollars.

A rebate is a partial refund of the cost of an item. It acts as an incentive to help sell the product. If your new cell phone came with a rebate, you'll get a check in the mail for a certain amount of the cost.

The rebate is recorded as a revenue reduction at the time of sale, resulting in a lower net sales figure on the income statement. No separate liability account is typically established for price reduction rebates since they are considered to reduce the sales price directly.

The rebate accrual is the amount of rebate that has been earnt, but not yet received (or for customer rebates, the amount that is owed but not yet paid). For example, you may earn a quarterly rebate based on overall spend with a given supplier, but that supplier might only pay that rebate at the end of the year.

In some cases, rebates are considered income. This happens when a business provides a service to another business or directly to a customer, and there's a vendor rebate being offered by a third party.

In marketing, a rebate is a form of buying discount and is an amount paid by way of reduction, return, or refund that is paid retrospectively. It is a type of sales promotion that marketers use primarily as incentives or supplements to product sales.

These words are related in meaning and can be confusing. They all refer to being paid back money that is owed. Rebate means "an amount of money that is paid back to you because you have paid too much or as an incentive for buying something." Here are a couple of examples: We hope to get a big tax rebate this year.

Does rebate mean subtract? ›

to deduct (a certain amount), as from a total. to return (part of an original payment): He rebated five dollars to me.

B2B rebates are typically financial incentives given by a manufacturer or supplier in order to motivate their trading partners to perform a certain action (such as increasing volume or spend or purchasing add-on items) to drive sales and profitability.

The rebate amount is the difference between the amount paid for the item on the transaction and the amount entered on the agreement.

A point-of-sale rebate gives you that cash back when you make the purchase, effectively reducing the cost of the item purchased. Rebates do not rely on income levels to receive the benefit. Depending upon your eligibility for each, you can, in some circ*mstances, claim both.

Direct Expenses are to be net of any discount, rebate, taxes and duties refundable, if any. be determined on the basis of amount incurred in connection therewith.

But if you think you need to report these rewards on your tax return, you'll be happy to know that it isn't necessary in most cases. For most of these rewards that are given to consumers, the IRS treats them as discounts rather than income.