Difference between trade discount and cash discount - Accountancy - Goods and Services Tax (GST)

Question

Difference between trade discount and cash discount ?

Sarthak Rattan Chopra · Accepted Answer

Dear student,

BASIS OF DIFFERENCE
TRADE DISCOUNT
CASH DISCOUNT

MEANING
It is defined as discount given by seller to buyer as deduction
in list price of the product
It refers to deduction in amount of sales allowed by seller to
pu rchaser for immediate payment

PURPOSE
To encourage bulk sales
to facilitate prompt payment

DISCLOSURE
It is not recorded in books of accounts
It is shown in books of accounts

TIME OF DISCOUNT
At time of sale
At time of payment

Regards

BASIS OF DIFFERENCE	TRADE DISCOUNT	CASH DISCOUNT
MEANING	It is defined as discount given by seller to buyer as deduction in list price of the product.	It refers to deduction in amount of sales allowed by seller to pu.rchaser for immediate payment
PURPOSE	To encourage bulk sales	to facilitate prompt payment
DISCLOSURE	It is not recorded in books of accounts	It is shown in books of accounts
TIME OF DISCOUNT	At time of sale	At time of payment