DEAR SIR/MADAM,
Why trade discount is not separately shown in the books of Accounts.
Regards
Ganesh Kumar Kashyap
1 Replies
Rama chary Rachakonda
(Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)
(5138 Points)
Replied 06 August 2015
The seller would not record a trade discount in the accounting records. Instead, it would only record revenue in the amount invoiced to the customer. If the seller were to record the retail price as well as a trade discount on an invoice to a reseller, this would create an unusually high gross sales amount in the income statement that might mislead any readers of the financial statements into thinking that the manufacturer has higher sales volume than is really the case (despite the presence of a large sales deduction for the trade discount)
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